Insurance Bill aims to amend key insurance laws

AS INTRODUCED IN LOK SABHA
Bill No. 31 of 2015
THE INSURANCE LAWS (AMENDMENT) BILL, 2015

A
BILL
further to amend the Insurance Act, 1938 and the General Insurance Business
(Nationalisation) Act, 1972 and to amend the Insurance Regulatory and
Development Authority Act, 1999 .
BE it enacted by Parliament in the Sixty-sixth Year of the Republic of India as follows:—
CHAPTER I
PRELIMINARY
1. (1) This Act may be called the Insurance Laws (Amendment) Act, 2015. Short title
and
5 (2) It shall be deemed to have come into force on the 26th day of December, 2014. commencement.
CHAPTER II
AMENDMENTS TO THE INSURANCE ACT, 1938
4 of 1938. 2. In the Insurance Act, 1938 (hereafter in this Chapter referred to as the Insurance Substitution
Act), throughout the Act,— of references
to certain
7 of 1913. 1 0 (a) for the words and figures "the Indian Companies Act,1913", wherever they expressions
occur, the words and figures "the Companies Act, 2013" shall be substituted; by certain
18 of 2013.
other
expressions.
2
(b) for the words and figures "the Companies Act,1956", wherever they occur, 1 of 1956.
the words and figures "the Companies Act, 2013" shall be substituted'. 18 of 2013.
Amendment 3. In section 2 of the Insurance Act,—

of section 2.
(i) for clauses (1) and (1A), the following clauses shall be substituted, namely:—
'(1) "actuary" means an actuary as defined in clause (a) of sub-section (1) 5
of section 2 of the Actuaries Act, 2006; 35 of 2006.
(1A) ''Authority'' means the Insurance Regulatory and Development

Authority of India established under sub-section (1) of section 3 of the Insurance
Regulatory and Development Authority Act, 1999;'; 41 of 1999.
(ii) clause (5A) shall be omitted; 10
(iii) after clause (6B), the following clause shall be inserted, namely:—
'(6C) "health insurance business" means the effecting of contracts which
provide for sickness benefits or medical, surgical or hospital expense benefits,
whether in-patient or out-patient travel cover and personal accident cover;';
(iv) for clause (7A), the following clause shall be substituted, namely:— 15
'(7A) "Indian insurance company" means any insurer, being a company

which is limited by shares, and,—
(a) which is formed and registered under the Companies Act, 2013 18 of 2013.
as a public company or is converted into such a company within one year
of the commencement of the Insurance Laws (Amendment) Act, 2015; 20
(b) in which the aggregate holdings of equity shares by foreign

investors, including portfolio investors, do not exceed forty-nine per cent.
of the paid up equity capital of such Indian insurance company, which is
Indian owned and controlled, in such manner as may be prescribed.
Explanation.--For the purposes of this sub-clause, the expression 25
"control" shall include the right to appoint a majority of the directors or to
control the management or policy decisions including by virtue of their
shareholding or management rights or shareholders agreements or voting
agreements;
(c) whose sole purpose is to carry on life insurance business or 30
general insurance business or re-insurance business or health insurance
business;’;
(v) clause (8) shall be omitted;
(vi) in clause (8A),—
(I) for sub-clause (b), the following sub-clause shall be substituted, 35
namely:—
"(b) having a minimum paid-up capital of rupees one hundred crore
in case of life insurance business, general insurance business and health
insurance business;";
(II) in sub-clause (d), after the words ''general insurance business'', the 40
words ''or health insurance business'' shall be inserted;
(vii) for clause (9), the following clause shall be substituted, namely:—
'(9) "insurer" means—
(a) an Indian Insurance Company, or
3
(b) a statutory body established by an Act of Parliament to carry on

insurance business, or
(c) an insurance co-operative society, or
(d) a foreign company engaged in re-insurance business through a
5 branch established in India.
Explanation.—For the purposes of this sub-clause, the expression
"foreign company" shall mean a company or body established or
incorporated under a law of any country outside India and includes Lloyd's
established under the Lloyd's Act, 1871 (United Kingdom) or any of its
10 Members;';
(viii) in clause (10), the words and figures "licensed under section 42" shall be
omitted;
(ix) in clause (11), in sub-clause (c), for the words "annuities payable out of any
fund", the words "benefit payable out of any fund'' shall be substituted;
15 (x) clauses (12), (13) and (15) shall be omitted;
(xi) in clause (16), for the words, brackets, figures and letter "clauses (13) and
7 of 1913. (13A) of section 2 of the Indian Companies Act, 1913", the words, brackets and figures
18 of 2013. "clause (68) and clause (72) of section 2 of the Companies Act, 2013" shall be
substituted;
20 (xii) after clause (16), the following clauses shall be inserted, namely:—
'(16A) "regulations" means the regulations framed by the Insurance
Regulatory and Development Authority of India established under the Insurance
41 of 1999. Regulatory and Development Authority Act, 1999;
(16B) "re-insurance" means the insurance of part of one insurer's risk by
25 another insurer who accepts the risk for a mutually acceptable premium;
(16C) ''Securities Appellate Tribunal'' means the Securities Appellate
Tribunal established under section 15K of the Securities and Exchange Board of
15 of 1992. India Act, 1992;';
(xiii) clause (17) shall be omitted.
30 4. After section 2CA of the Insurance Act, the following section shall be inserted, Insertion of
namely:— new section
2CB.
"2CB. (1) No person shall take out or renew any policy of insurance in respect of Properties in
any property in India or any ship or other vessel or aircraft registered in India with an India not to be
insured with
insurer whose principal place of business is outside India save with the prior permission
foreign
35 of the Authority. insurers
except with
(2) If any person contravenes the provision of sub-section (1), he shall be liable the permission
to a penalty which may extend to five crore rupees.". of Authority.
5. Section 2E of the Insurance Act shall be omitted. Omission of

section 2E.
6. In section 3 of the Insurance Act,— Amendment
of section 3.
40 (i) for sub-section (2), the following sub-section shall be substituted, namely:—
“(2) Every application for registration shall be made in such manner and
shall be accompanied by such documents as may be specified by the
regulations.";
(ii) in sub-section (2A), in clause (d), for the figures, letter and word "5, 31A and
45 32", the figures, word and letter "5 and 31A" shall be substituted;
4
(iii) for sub-section (2C), the following sub-section shall be substituted,

namely:—
"(2C) Any person aggrieved by the decision of the Authority refusing
registration may, within thirty days from the date on which a copy of the decision
is received by him, appeal to the Securities Appellate Tribunal."; 5
(iv) sub-section (2D) shall be omitted;

(v) for sub-sections (3), (4), (5) and (5A), the following sub-sections shall be
substituted, namely:—
"(3) In the case of any insurer having joint venture with a person having
its principal place of business domiciled outside India or any insurer as defined 10
in sub-clause (d) of clause (9) of section 2, the Authority may withhold registration
already made if it is satisfied that in the country in which such person has been
debarred by law or practice of that country to carry on insurance business.
(4) The Authority may suspend or cancel the registration of an insurer
either wholly or in so far as it relates to a particular class of insurance business, 15
as the case may be,—
(a) if the insurer fails, at any time, to comply with the provisions of
section 64VA as to the excess of the value of his assets over the amount of
his liabilities, or
(b) if the insurer is in liquidation or is adjudged as an insolvent, or 20
(c) if the business or a class of the business of the insurer has been
transferred to any person or has been transferred to or amalgamated with
the business of any other insurer without the approval of the Authority, or
(d) if the insurer makes default in complying with, or acts in
contravention of, any requirement of this Act or of any rule or any regulation 25
or order made or, any direction issued thereunder, or
(e) if the Authority has reason to believe that any claim upon the
insurer arising in India under any policy of insurance remains unpaid for
three months after final judgment in regular court of law, or
(f) if the insurer carries on any business other than insurance business 30
or any prescribed business, or
(g) if the insurer makes a default in complying with any direction
issued or order made, as the case may be, by the Authority under the
Insurance Regulatory and Development Authority Act, 1999, or 41 of 1999.
(h) if the insurer makes a default in complying with, or acts in 35

18 of 2013.
contravention of, any requirement of the Companies Act, 2013 or the General
57 of 1972.
Insurance Business (Nationalisation) Act, 1972 or the Foreign Exchange 42 of 1999.
Management Act, 1999 or the Prevention of Money Laundering Act, 2002, 15 of 2002.
or
(i) if the insurer fails to pay the annual fee required under section 40
3A, or
(j) if the insurer is convicted for an offence under any law for the
time being in force, or
(k) if the insurer being a co-operative society set up under the relevant
State laws or, as the case may be, the Multi-State Co-operative Societies 45
Act, 2002, contravenes the provisions of law as may be applicable to the 39 of 2002.
insurer.
5
(5) When the Authority suspends or cancels any registration under

clause(a), clause (d), clause (e), clause (f), clause (g) or clause (i) of sub-section
(4), it shall give notice in writing to the insurer of its decision, and the decision
shall take effect on such date as it may specify in that behalf in the notice, such
5 date not being less than one month not more than two months from the date of
the receipt of the notice in the ordinary course of transmission.
(5A) When the Authority suspends or cancels any registration under
clause (b), (c), (j) or (k) of sub-section (4), the suspension or cancellation, as the
case may be, shall take effect on the date on which notice of the order of
10 suspension or cancellation is served on the insurer.";
(vi) for sub-section (5C), the following sub-section shall be substituted, namely:—
"(5C) Where a registration is suspended or cancelled under clause (a),
clause (d), clause (e), clause (f), clause (g) or clause (i) of sub-section (4), the
Authority may at its discretion revive the registration, if the insurer within six
15 months from the date on which the suspension or cancellation took effect
complies with the provisions of section 64VA as to the excess of the value of his
assets over the amount of his liabilities or has had an application under sub-
section (4) of section 3A accepted, or satisfies the Authority that no claim upon
him such as is referred to in clause (e) of sub-section (4) remains unpaid or that
20 he has complied with any requirement of this Act or the Insurance Regulatory
41 of 1999. and Development Authority Act, 1999, or of any rule or any regulation, or any
order made thereunder or any direction issued under those Acts, or that he has
ceased to carry on any business other than insurance business or any prescribed
business, as the case may be, and complies with any directions which may be
25 given to him by the Authority.".
7. For section 3A of the Insurance Act, the following section shall be substituted, Substitution
namely:— of new
section for
section 3A.
"3A. (1) An insurer who has been granted a certificate of registration under Payment of
section 3 shall pay such annual fee to the Authority in such manner as may be specified annual fee by
insurer.
30 by the regulations.
(2) Any failure to deposit the annual fee shall render the certificate of registration
liable to be cancelled.".
8. For section 4 of the Insurance Act, the following section shall be substituted, Substitution
namely:— of new
section for
section 4.
35 "4. The insurer shall pay or undertake to pay on any policy of life insurance or a Minimum
group policy issued, a minimum annuity and other benefits as may be determined by limits for
annuities and
regulations excluding any profit or bonus provided that this shall not prevent an
other benefits
insurer from converting any policy into a paid-up policy of any value or payment of secured by
surrender value of any amount.". policies of
life insurance.
40 9. In section 5 of the Insurance Act,— Amendment
of section 5.
(i) in sub-section (1), both the provisos shall be omitted;
(ii) sub-section (3) shall be omitted.
namely:— of new
section for
section 6.
45 "6. (1) No insurer not being an insurer as defined in sub-clause (d) of clause (9) Requirement
of section 2, carrying on the business of life insurance, general insurance, health as to capital.
6
insurance or re-insurance in India or after the commencement of the Insurance

Regulatory and Development Authority Act, 1999, shall be registered unless he has,— 41 of 1999.
(i) a paid-up equity capital of rupees one hundred crore, in case of a

person carrying on the business of life insurance or general insurance; or
(ii) a paid-up equity capital of rupees one hundred crore, in case of a 5
person carrying on exclusively the business of health insurance; or
(iii) a paid-up equity capital of rupees two hundred crore, in case of a
person carrying on exclusively the business as a re-insurer:
Provided that the insurer, may enhance the paid-up equity capital, as
provided in this section in accordance with the provisions of the Companies 10
Act, 2013, the Securities and Exchange Board of India Act, 1992 and the rules, 18 of 2013.
regulations or directions issued thereunder or any other law for the time being in 15 of 1992.
force:
Provided further that in determining the paid-up equity capital, any
preliminary expenses incurred in the formation and registration of any insurer as 15
may be specified by the regulations made under this Act, shall be excluded.
(2) No insurer, as defined in sub-clause (d) of clause (9) of section 2, shall be
registered unless he has net owned funds of not less than rupees five thousand
crore.".
Amendment 11. In section 6A of the Insurance Act,— 20
of section
6A. (i) for sub-section (1), the following sub-section shall be substituted, namely:—
"(1) No public company limited by shares having its registered office in
India, shall carry on life insurance business or general insurance business or
health insurance business or re-insurance business, unless it satisfies the
following conditions, namely:— 25
(i) that the capital of the company shall consist of equity shares
each having a single face value and such other form of capital, as may be
specified by the regulations;
(ii) that the voting rights of shareholders are restricted to equity
shares; 30
(iii) that, except during any period not exceeding one year allowed
by the company for payment of calls on shares, the paid-up amount is the
same for all shares, whether existing or new:
Provided that the conditions specified in this sub-section shall not
apply to a public company which has, before the commencement of the 35
Insurance (Amendment) Act, 1950, issued any shares other than ordinary 47 of 1950.
shares each of which has a single face value or any shares, the paid-up
amount whereof is not the same for all of them for a period of three years
from such commencement.";
(ii) in sub-section (2), after the words "paid-up amount of the", the word 40
"equity"shall be inserted;
(iii) for sub-section (4), the following sub-section shall be substituted, namely:—
"(4) A public company as aforesaid which carries on life insurance business,
general and health insurance business and re-insurance business—
(a) shall, in addition to the register of members maintained under the 45
Companies Act, 2013, maintain a register of shares in which the name, 18 of 2013.
occupation and address of the beneficial owner of each share shall be
7
entered including any change of beneficial owner declared to it within

fourteen days from the receipt of such declaration;
(b) shall not register any transfer of its shares—
(i) unless, in addition to compliance being made with the
18 of 2013. 5 provisions of section 56 of the Companies Act, 2013, the transferee
furnishes a declaration in the prescribed form as to whether he
proposes to hold the shares for his own benefit or as a nominee,
whether jointly or severally, on behalf of others and in the latter case
giving the name, occupation and address of the beneficial owner or
10 owners, and the extent of the beneficial interest of each;
(ii) where, after the transfer, the total paid-up holding of the
transferee in the shares of the company is likely to exceed five per
cent. of its paid-up capital unless the previous approval of the
Authority has been obtained to the transfer;
15 (iii) where, the nominal value of the shares intended to be
transferred by any individual, firm, group, constituents of a group,
or body corporate under the same management, jointly or severally
exceeds one per cent. of the paid-up equity capital of the insurer,
unless the previous approval of the Authority has been obtained
20 for the transfer.
Explanation.—For the purposes of this sub-clause, the
expressions "group" and "same management" shall have the
meanings respectively assigned to them in the Competition Act,
12 of 2003. 2002.";
25 (iv) sub-sections (3), (6), (7), (8), (9) and (10) shall be omitted;
(v) in sub-section (11),—
(a) in the opening portion, the words, brackets and figures "except those of sub-
sections (7), (8) and (9)" shall be omitted;
(b) in clause (i) the word “and” shall be omitted;
30 (c) clause (ii) shall be omitted;
(d) in the Explanation 1, in clause (ii), in sub-clause (c), the words "managing
agent" shall be omitted.
12. Section 6AA of the Insurance Act shall be omitted. Omission of
section 6AA.
13. In section 6B of the Insurance Act,— Amendment
of section 6B.
35 (i) in sub-section (1),—
(a) for the words "life insurance business", the words "life or general or
health insurance or re-insurance business" shall be substituted; and
(b) for the words "Central Government", the word "Authority" shall be
substituted;
40 (ii) in sub-sections (2) and (3), for the words "High Court", the words "the
Securities Appellate Tribunal" shall be substituted;".
(iii) sub-section (4) shall be omitted.
14. Sections 6C, 7, 8 and 9 of the Insurance Act shall be omitted. Omission of
sections 6C,
7, 8 and 9.

of section 10.
45 (i) in sub-section (1), for the words "prescribed in this behalf", the words
"specified by the regulations" shall be substituted;
8
(ii) in sub-section (2),—

(a) the words, brackets and figures, "after the expiry of six months from the
commencement of the Insurance (Amendment) Act, 1946", shall be omitted; 6 of 1946.
(b) the words "under the law of the insurer's country" occurring at the
end, shall be omitted. 5
(iii) after sub-section (2A), the following sub-section shall be inserted, namely:—
"(2AA) Where the insurer carries on the business of insurance, all receipts
due in respect of each sub-class of such insurance business shall be carried to
and shall form a separate fund, the assets of which shall be kept separate and
distinct from other assets of the insurer and every insurer shall submit to the 10
Authority the necessary details of such funds as may be required by the Authority
from time to time and such funds shall not be applied directly or indirectly, save
as expressly permitted under this Act or regulations made thereunder.".
Substitution 16. For section 11 of the Insurance Act, the following section shall be substituted,
of new namely:— 15
section for
section 11.
Accounts and "11. (1) Every insurer, on or after the date of the commencement of the Insurance
balance sheet. Laws (Amendment) Act, 2015, in respect of insurance business transacted by him and
in respect of his shareholders' funds, shall, at the expiration of each financial year,
prepare with reference to that year, balance sheet, a profit and loss account, a separate
account of receipts and payments, a revenue account in accordance with the regulations 20
as may be specified.
(2) Every insurer shall keep separate accounts relating to funds of shareholders
and policyholders.
(3) Unless the insurer is a company as defined in clause (20) of section 2 of the
Companies Act, 2013, the accounts and statements referred to in sub-section (1) shall 2 5 18 of 2013.
be signed by the insurer, or in the case of a company by the chairman, if any, and two
directors and the principal officer of the company, or in case of an insurance cooperative
society by the person in-charge of the society and shall be accompanied by a statement
containing the names, descriptions and occupations of, and the directorships held by,
the persons in charge of the management of the business during the period to which 30
such accounts and statements refer and by a report on the affairs of the business
during that period.".
of new namely:—
section for
section 12.
Audit. "12. The balance sheet, profit and loss account, revenue account and profit and 35
loss appropriation account of every insurer, in respect of all insurance business
transacted by him, shall, unless they are subject to audit under the Companies Act,
2013, be audited annually by an auditor, and the auditor shall in the audit of all such 18 of 2013.
accounts have the powers of, exercise the functions vested in, and discharge the
duties and be subject to the liabilities and penalties imposed on, auditors of companies 40
by section 147 of the Companies Act, 2013.".
of section 13.
(i) for sub-section (1), the following sub-section shall be substituted, namely:—
"(1) Every insurer carrying on life insurance business shall, once at least
every year cause an investigation to be made by an actuary into the financial 45
condition of the life insurance business carried on by him, including a valuation
of his liabilities in respect thereto and shall cause an abstract of the report of
such actuary to be made in accordance with the regulations:
9
Provided that the Authority may, having regard to the circumstances of

any particular insurer, allow him to have the investigation made as at a date not
later than two years from the date as at which the previous investigation was
made:
5 Provided further that every insurer, on or after the commencement of the
41 of 1999. Insurance Regulatory and Development Authority Act, 1999, shall cause an
abstract of the report of the actuary to be made in such manner as may be
specified by the regulations.";
(ii) for sub-section (4), the following sub-section shall be substituted, namely:—
10 "(4) There shall be appended to every such abstract a statement prepared
in such form and in such manner as may be specified by the regulations:
Provided that, if the investigation referred to in sub-sections (1) and (2) is
made annually by any insurer, the statement need not be appended every year
but shall be appended at least once in every three years.";
15 (iii) for sub-section (6), the following sub-section shall be substituted, namely:—
'(6) The provisions of this section relating to the life insurance business
shall apply also to any such sub-class of insurance business included in the
class "Miscellaneous Insurance" and the Authority may authorise such
modifications and variations of regulations as may be necessary to facilitate
20 their application to any such sub-class of insurance business:
Provided that, if the Authority is satisfied that the number and amount of
the transactions carried out by an insurer in any such sub-class of insurance
business is so small as to render periodic investigation and valuation
unnecessary, it may exempt that insurer from the operation of this sub-section in
25 respect of that sub-class of insurance business.'.
namely:— of new
section for
section 14.
"14. (1) Every insurer, in respect of all business transacted by him, shall maintain— Record of
policies and
(a) a record of policies, in which shall be entered, in respect of every policy claims.
30 issued by the insurer, the name and address of the policyholder, the date when
the policy was effected and a record of any transfer, assignment or nomination
of which the insurer has notice;
(b) a record of claims, every claim made together with the date of the claim,
the name and address of the claimant and the date on which the claim was
35 discharged, or, in the case of a claim which is rejected, the date of rejection and
the grounds thereof; and
(c) a record of policies and claims in accordance with clauses (a) and (b)
may be maintained in any such form, including electronic mode, as may be
specified by the regulations made under this Act.
40 (2) Every insurer shall, in respect of all business transacted by him, endeavour
to issue policies above a specified threshold in terms of sum assured and premium in
electronic form, in the manner and form to be specified by the regulations made under
this Act.".
45 namely:— of new
section for
section 15.
10
Submission of "15. (1) The audited accounts and statements referred to in section 11 or sub-
returns. section (5) of section 13 and the abstract and statement referred to in section 13 shall
be printed, and four copies thereof shall be furnished as returns to the Authority
within six months from the end of the period to which they refer.
(2) Of the four copies so furnished, one shall be signed in the case of a company 5
by the chairman and two directors and by the principal officer of the company and, if
the company has a managing director by that managing director and one shall be
signed by the auditor who made the audit or the actuary who made the valuation, as
the case may be.".
Omission of 21. Section 16 of the Insurance Act shall be omitted. 10
section 16.
Omission of 22. Sections 17 and 17A of the Insurance Act shall be omitted.
sections 17
and 17A.
of section 20.
"(1) Every return furnished to the Authority or certified copy thereof shall
be kept by the Authority and shall be open to inspection; and any person may 15
procure a copy of any such return, or of any part thereof, on payment of such fee
as may be specified by the regulations.";
(ii) in sub-section (2), the words and figures "or section 16" shall be omitted;
(iii) in sub-section (3), for the words "one rupee", the words "such fee as may be
specified by the regulations" shall be substituted. 20
of section 21.
(i) in sub-section (1), in clause (d), the words and figures ''or section 16'' shall be
omitted;
(ii) for sub-section (2), the following sub-section shall be substituted, namely:—
"(2) The Securities Appellate Tribunal may, on the application of an insurer 25
and after hearing the Authority, cancel any order made by the Authority under
clause (d) of sub-section (1) or may direct the acceptance of such a return which
the Authority has declined to accept, if the insurer satisfies the Tribunal that the
action of the Authority was in the circumstances unreasonable:
Provided that no application under this sub-section shall be entertained 30
unless it is made before the expiration of four months from the date when the
Authority made the order or declined to accept the return.".
of section 22.
(i) in sub-section (1), the words, brackets, letter and figures"or an abstract of a
valuation report furnished under clause (c) of sub-section (2) of section 16" shall be 35
omitted;
(ii) in sub-section (2), the words, brackets and figures "or, as the case may be, of
sub-section (2) of section 16" shall be omitted.
Substitution 26. For sections 27, 27A, 27B, 27C and 27D of the Insurance Act, the following sections
of new shall be substituted, namely:— 40
sections for
sections 27,
27A, 27B,
27C and 27D.
Investment of ‘27. (1) Every insurer shall invest and at all times keep invested assets equivalent
assets. to not less than the sum of—
(a) the amount of his liabilities to holders of life insurance policies in India
on account of matured claims, and
11
(b) the amount required to meet the liability on policies of life insurance
maturing for payment in India,
less—
(i) the amount of premiums which have fallen due to the insurer on
5 such policies but have not been paid and the days of grace for payment of
which have not expired, and
(ii) any amount due to the insurer for loans granted on and within
the surrender values of policies of life insurance maturing for payment in
India issued by him or by an insurer whose business he has acquired and
10 in respect of which he has assumed liability in the following manner,
namely:—
(a) twenty-five per cent. of the said sum in Government
securities, a further sum equal to not less than twenty-five per cent.
of the said sum in Government securities or other approved
15 securities; and
(b) the balance in any of the approved investments,
as may be specified by the regulations subject to the limitations, conditions and
restrictions specified therein.
(2) In the case of an insurer carrying on general insurance business, twenty per
20 cent. of the assets in Government Securities, a further sum equal to not less than ten
per cent. of the assets in Government Securities or other approved securities and the
balance in any other investment in accordance with the regulations of the Authority
and subject to such limitations, conditions and restrictions as may be specified by the
Authority in this regard.
25 Explanation.—In this section, the term "assets" means all the assets of insurer
at their carrying value but does not include any assets specifically held against any
fund or portion thereof in respect of which the Authority is satisfied that such fund or
portion thereof, as the case may be, is regulated by the law of any country outside
India or miscellaneous expenditure or in respect of which the Authority is satisfied that
30 it would not be in the interest of the insurer to apply the provisions of this section.
(3) For the purposes of sub-sections (1) and (2), any specified assets shall,
subject to such conditions, if any, as may be specified, be deemed to be assets invested
or kept invested in approved investments specified by regulations.
(4) In computing the assets referred to in sub-sections (1) and (2), any investment
35 made with reference to any currency other than the Indian rupee which is in excess of
the amount required to meet the liabilities of the insurers in India with reference to that
currency, to the extent of such excess, shall not be taken into account:
Provided that nothing contained in this sub-section shall affect the operation of
sub-section (2):
40 Provided further that the Authority may, either generally or in any particular
case, direct that any investment shall, subject to such conditions as may be imposed,
be taken into account, in such manner as may be specified in computing the assets
referred to in sub-sections (1) and (2) and where any direction has been issued under
this proviso, copies thereof shall be laid before each house of Parliament as soon as
45 may be after it is issued.
(5) Where an insurer has accepted re-insurance in respect of any policies of life
insurance issued by another insurer and maturing for payment in India or has ceded re-
insurance to another insurer in respect of any such policies issued by himself, the sum
referred to in sub-section (1) shall be increased by the amount of the liability involved
50 in such acceptance and decreased by the amount of the liability involved in such
cession.
12
(6) The Government securities and other approved securities in which assets are
under sub-section (1) or sub-section (2) to be invested and kept invested shall be held
by the insurer free of any encumbrance, charge, hypothecation or lien.
(7) The assets required by this section to be held invested by an insurer
incorporated or domiciled outside India shall, except to the extent of any part thereof 5
which consists of foreign assets held outside India, be held in India and all such assets
shall be held in trust for the discharge of the liabilities of the nature referred to in sub-
section (1) and shall be vested in trustees resident in India and approved by the
Authority, and the instrument of trust under this sub-section shall be executed by the
insurer with the approval of the Authority and shall define the manner in which alone 10
the subject-matter of the trust shall be dealt with.
Explanation.—This sub-section shall apply to an insurer incorporated in India
whose share capital to the extent of one-third is owned by, or the members of whose
governing body to the extent of one-third consists of members domiciled elsewhere
than in India. 15
Further 27A. (1) No insurer carrying on life insurance business shall invest or keep
provisions invested any part of his controlled fund and no insurer carrying on general business
regarding
shall invest or keep invested any part of his assets otherwise than in any of the
investments.
approved investments as may be specified by the regulations subject to such limitations,
conditions and restrictions therein. 20
(2) Notwithstanding anything contained in sub-section (1) or sub-section (2) of

section 27, an insurer may, subject to the provisions contained in the next succeeding
sub-sections, invest or keep invested any part of his controlled fund or assets otherwise
than in an approved investment, if—
(i) after such investment, the total amounts of all such investments of the 25
insurer do not exceed fifteen per cent. of the sum referred to in sub-section (1) of
section 27 or fifteen per cent. of the assets referred to in sub-section (2) as the
case may be;
(ii) the investment is made, or, in the case of any investment already made,
the continuance of such investment is with the consent of all the directors 30
present at a meeting and eligible to vote, special notice of which has been given
to all the directors then in India, and all such investments, including investments
in which any director is interested, are reported without delay to the Authority
with full details of the investments and the extent of the director's interest in any
such investment. 35
(3) An insurer shall not out of his controlled fund or assets as referred to in
section 27,—
(a) invest in the shares of any one banking company; or
(b) invest in the shares or debentures of any one company,
more than the percentage specified by the regulations. 40
(4) An insurer shall not out of his controlled fund or assets as referred to in
sub-section (2) of section 27 invest or keep invested in the shares or debentures of
any private limited company.
(5) All assets forming the controlled fund or assets as referred to in
sub-section (2), of section 27, not being Government securities or other approved 45
securities in which assets are to be invested or held invested in accordance with this
section, shall (except for a part thereof not exceeding one-tenth of the controlled fund
or assets as referred to in sub-section (2) thereof in value which may, subject to such
conditions and restrictions as may be prescribed, be offered as security for any loan
13
taken for purposes of any investment), be held free of any encumbrance, charge,
hypothecation or lien.
(6) If at any time the Authority considers any one or more of the investments of
an insurer to be unsuitable or undesirable, the Authority may, after giving the insurer
5 an opportunity of being heard, direct him to realise the investment or investments, and
the insurer shall comply with the direction within such time as may be specified in this
behalf by the Authority.
(7) Nothing contained in this section shall be deemed to affect in any way the
manner in which any moneys relating to the provident fund of any employee or to any
10 security taken from any employee or other moneys of a like nature are required to be
held by or under any Central Act, or Act of a State legislature.
Explanation.—In this section "controlled fund" means—
(a) in the case of any insurer carrying on life insurance business—
(i) all his funds, if he carries on no other class of insurance business;
15 (ii) all the funds in India appertaining to his life insurance business
if he carries on some other class of insurance business also.
Explanation.—For the purposes of sub-clauses (i) and (ii), the fund does
not include any fund or portion thereof in respect of which the Authority is
satisfied that such fund or portion, as the case may be, is regulated by the law in
20 force of any country outside India or it would not be in the interest of the insurer
to apply the provisions of this section;
(b) in the case of any other insurer carrying on life insurance business—
(i) all his funds in India, if he carries on no other class of insurance
business;
25 (ii) all the funds in India appertaining to his life insurance business
if he carries on some other class of insurance business also; but does not
include any fund or portion thereof in respect of which the Authority is
satisfied that such fund or portion thereof, as the case may be, is regulated
by the law of any country outside India or in respect of which the Authority
30 is satisfied that it would not be in the interest of the insurer to apply the
provisions of this section.
27B. (1) All assets of an insurer carrying on general insurance business shall, Provisions
regarding
subject to such conditions, if any, as may be prescribed, be deemed to be assets investments
invested or kept invested in approved investments specified in section 27. of assets of
insurer
35 (2) All assets shall (except for a part thereof not exceeding one-tenth of the total carrying
assets in value which may subject to such conditions and restrictions as may be general
prescribed, be offered as security for any loan taken for purposes of any investment or insurance
for payment of claims, or which may be kept as security deposit with the banks for business.
acceptance of policies) be held free of any encumbrance, charge, hypothecation or
40 lien.
(3) Without prejudice to the powers conferred on the Authority by sub-section
(5) of section 27A nothing contained in this section shall be deemed to require any
insurer to realise any investment made in conformity with the previsions of sub-
section (1) of section 27 after the commencement of the Insurance (Amendment) Act,
62 of 1968. 4 5 1968, which, after the making thereof, has ceased to be an approved investment within
the meaning of this section.
27C. An insurer may invest not more than five per cent. in aggregate of his Investment
controlled fund or assets as referred to in sub-section (2) of section 27 in the companies by insurer in
certain cases.
14
belonging to the promoters, subject to such conditions as may be specified by the

regulations.
Manner and 27D. (1) Without prejudice to anything contained in this section, the Authority
condition of
may, in the interests of the policyholders, specify by the regulations, the time, manner
investment.
and other conditions of investment of assets to be held by an insurer for the purposes 5
of this Act.
(2) The Authority may give specific directions for the time, manner and other
conditions subject to which the funds of policyholders shall be invested in the
infrastructure and social sector as may be specified by the regulations and such regulations
shall apply uniformly to all the insurers carrying on the business of life insurance, 10
general insurance, or health insurance or re-insurance in India on or after the
commencement of the Insurance Regulatory and Development Authority Act, 1999. 41 of 1999.
(3) The Authority may, after taking into account the nature of business and to
protect the interests of the policyholders, issue to an insurer the directions relating to
the time, manner and other conditions of investment of assets to be held by him: 15
Provided that no direction under this sub-section shall be issued unless the
insurer concerned has been given a reasonable opportunity of being heard.
Prohibition 27E. No insurer shall directly or indirectly invest outside India the funds of the
for policy holders.".
investment
of funds
outside India.
Substitution of 27. For section 28, section 28A and section 28B of the Insurance Act, the following 20
new section section shall be substituted, namely:—
for section
28, section
28A and
section 28B.
Statement "28. Every insurer shall submit to the Authority returns giving details of
and return of investments made, in such form, time and manner including its authentication as may
investment of
assets.
be specified by the regulations.".
Substitution 28. For section 29 of the Insurance Act, the following section shall be substituted, 25
of new namely:—
section for
section 29.
Prohibition of "29. (1) No insurer shall grant loans or temporary advances either on
loans. hypothecation of property or on personal security or otherwise, except loans on life
insurance policies issued by him within their surrender value, to any director, manager,
actuary, auditor or officer of the insurer, if a company or to any other company or firm 30
in which any such director, manager, actuary or officer holds the position of a director,
manager, actuary, officer or partner:
Provided that nothing contained in this sub-section shall apply to such loans,
made by an insurer to a banking company, as may be specified by the Authority:
Provided further that nothing in this section shall prohibit a company from 35
granting such loans or advances to a subsidiary company or to any other company of
which the company granting the loan or advance is a subsidiary company if the
previous approval of the Authority is obtained for such loan or advance.
(2) The provisions of section 185 of the Companies Act, 2013 shall not apply to 18 of 2013.
a loan granted to a director of an insurer being a company, if the loan is one granted on 40
the security of a policy on which the insurer bears the risk and the policy was issued
to the director on his own life, and the loan is within the surrender value of the policy.
(3) Subject to the provisions of sub-section (1), no insurer shall grant—
15
(a) any loans or temporary advances either on hypothecation of property

or on personal security or otherwise, except such loans as may be specified by
the regulations including the loans sanctioned as part of their salary package to
the fulltime employees of the insurer as per the scheme duly approved by its
5 Board of Directors;
(b) temporary advances to any insurance agent to facilitate the carrying
out of his functions as such except in cases where such advances do not exceed
in the aggregate the renewal commission earned by him during the immediately
preceding year.
10 (4) Where any event occurs giving rise to circumstances, the existence of which
at the time of grant of any subsisting loan or advance would have made such grant a
contravention of this section, such loan or advance shall, notwithstanding anything
in any contract to the contrary, be repaid within three months from the occurrence of
such event.
15 (5) In case of default in complying with the provisions of sub-section (4), the
director, manager, auditor, actuary, officer or insurance agent concerned shall, without
prejudice to any other penalty which he may incur, cease to hold office under, or to act
for, the insurer granting the loan on the expiry of three months.".
section for
section 30.
"30. If by reason of a contravention of any of the provisions of section 27, 27A, Liability of
27B, 27C, 27D or section 29, any loss is sustained by the insurer or by the policyholders, directors, etc.,
for loss due to
every director, manager or officer who is knowingly a party to such contravention contravention
shall, without prejudice to any other penalty to which he may be liable under this Act, of section 27,
25 be jointly and severally liable to make good the amount of such loss.". 27A, 27B,
27C, 27D or
section 29.
30. In section 31 of the Insurance Act, for sub-section (1), the following sub-section Amendment
shall be substituted, namely:— of section 31.
"(1) None of the assets in India of any insurer shall, except in so far as assets are
required to be vested in trustees under sub-section (7) of section 27, be kept otherwise
30 than in the name of a public officer approved by the Authority, or in the corporate name
of the undertaking, if a company or an insurance co-operative society, as the case may
be.".
31. In section 31A of the Insurance Act,— Amendment
of section
(a) in sub-section (1), in clause (c)—- 31A.
35 (I) for sub-clauses (i) and (ii) to the proviso, the following sub-clause
shall be substituted, namely:—
"(i) the payment of commission to an insurance agent, in respect of
insurance business procured by or through him;";
(II) clause (iii) to the proviso shall be omitted;
40 (b) in sub-section (3), for the words, figures and letter "or in section 86B of the
7 of 1913. Indian Companies Act, 1913", the words "or in any other law for the time being in
force" shall be substituted.
32. For section 31B of the Insurance Act, the following section shall be substituted, Substitution
namely:— of new
section for
section 31B.
45 "31B. No insurer shall in respect of insurance business transacted by him, shall Power to
pay to any person by way of remuneration, whether by way of commission or otherwise restrict
payment of
in excess of such sum as may be specified by the regulations." . excessive
remuneration.
16
Omission of 33. Section 32 of the Insurance Act shall be omitted.

section 32.
Amendment 34. In section 32A of the Insurance Act,—
of section
32A (i) in sub-section (1), the words, brackets, letter and figures ''specified in sub-
clause (b) of clause (9) of section 2 and,'' shall be omitted;
(ii) sub-sections (2) and (3) shall be omitted. 5
Amendment 35. In section 32B of the Insurance Act, for the words "rural or social sector", the
of section words "rural and social sectors" shall be substituted.
32B.
Insertion of 36. After section 32C of the Insurance Act, the following section shall be inserted,
new section
namely:—
32D.
Obligation of "32D. Every insurer carrying on general insurance business shall, after the 10
insurer in commencement of the Insurance Laws (Amendment) Act, 2015, underwrite such
respect of
insurance
minimum percentage of insurance business in third party risks of motor vehicles as
business in may be specified by the regulations:
third party
risks of Provided that the Authority may, by regulations, exempt any insurer who is
motor primarily engaged in the business of health, re-insurance, agriculture, export credit 15
vehicles. guarantee, from the application of this section.".
of new namely:—
section for
section 33.
Power of "33. (1) The Authority may, at any time, if it considers expedient to do so by
investigation order in writing, direct any person (herein referred to as "Investigating Officer") specified 20
and
in the order to investigate the affairs of any insurer or intermediary or insurance
inspection by
Authority. intermediary, as the case may be, and to report to the Authority on any investigation
made by such Investigating Officer:
Provided that the Investigating Officer may, wherever necessary, employ any
auditor or actuary or both for the purpose of assisting him in any investigation under 25
this section.
(2) Notwithstanding anything to the contrary contained in section 210 of the
Companies Act, 2013, the Investigating Officer may, at any time, and shall, on being 18 of 2013.
directed so to do by the Authority, cause an inspection to be made by one or more of
his officers of the books of account of any insurer or intermediary or insurance 30
intermediary, as the case may be, and the Investigating Officer shall supply to the
insurer or intermediary or insurance intermediary, as the case may be, a copy of the
report on such inspection.
(3) It shall be the duty of every manager, managing director or other officer of the
insurer including a service provider, contractor of an insurer where services are 35
outsourced by the insurer, or intermediary or insurance intermediary, as the case may
be, to produce before the Investigating Officer directed to make the investigation
under sub-section (1), or inspection under sub-section (2), all such books of account,
registers, other documents and the database in his custody or power and to furnish
him with any statement and information relating to the affairs of the insurer or 40
intermediary or insurance intermediary, as the case may be, as the Investigating Officer
may require of him within such time as the said Investigating Officer may specify.
(4) Any Investigating Officer, directed to make an investigation under sub-
section (1), or inspection under sub-section (2), may examine on oath, any manager,
managing director or other officer of the insurer including a service provider or contractor 45
where the services are outsourced by the insurer or intermediary or insurance
intermediary, as the case may be, in relation to his business.
(5) The Investigating Officer shall, if he has been directed by the Authority to
cause an inspection to be made, make a report to the Authority on such inspection.
17
(6) On receipt of any report under sub-section (1) or sub-section (5), the
Authority may, after giving such opportunity to the insurer or intermediary or
insurance intermediary, as the case may be, to make a representation in connection
with the report as, in the opinion of the Authority, seems reasonable, by order in
5 writing, —
(a) require the insurer, to take such action in respect of any matter arising
out of the report as the Authority may think fit; or
(b) cancel the registration of the insurer or intermediary or insurance
intermediary, as the case may be; or
10 (c) direct any person to apply to the court for the winding up of the insurer
or intermediary or insurance intermediary, as the case may be, if it is a company,
whether the registration of the insurer or intermediary or insurance intermediary,
as the case may be, has been cancelled under clause (b) or not.
(7) The Authority may by the regulations made by it specify the minimum
15 information to be maintained by insurers or intermediary or insurance intermediary, as
the case may be, in their books, the manner in which such information shall be
maintained, the checks and other verifications to be adopted by insurers or intermediary
or insurance intermediary, as the case may be, in that connection and all other matters
incidental thereto as are, in its opinion, necessary to enable the Investigating Officer
20 to discharge satisfactorily his functions under this section.
Explanation.—For the purposes of this section, the expression "insurer" shall
include in the case of an insurer incorporated in India—
(a) all its subsidiaries formed for the purpose of carrying on the business
of insurance exclusively outside India; and
25 (b) all its branches whether situated in India or outside India.
(8) Any insurer or intermediary or insurance intermediary aggrieved by any
order made under this section may prefer an appeal to the Securities Appellate Tribunal.
(9) All expenses of, and incidental to, any investigation made under this section
shall be defrayed by the insurer or intermediary or insurance intermediary, as the case
30 may be, shall have priority over the debts due from the insurer and shall be recoverable
as an arrear of land revenue.".
38. In section 34B of the Insurance Act, for sub-section (4), the following sub-section Amendment
shall be substituted, namely:— of section
34B.
"(4) If any person in respect of whom an order is made by the Authority under
35 sub-section (1) or under the proviso to sub-section (2), contravenes the provisions of
this section, he shall be liable to a penalty of one lakh rupees for each day during which
such contravention continues or one crore rupees, whichever is less.".
39. In section 34C of the Insurance Act, for sub-section (1), the following sub-section Amendment
shall be substituted, namely:— of section
34C.
40 "(1) If the Authority is of opinion that in the public interest or in the interest of
an insurer or his policyholders it is necessary so to do, it may, from time to time, by
order in writing, appoint, in consultation with the Central Government with effect from
such date as may be specified in the order, one or more persons to hold office as
additional directors of the insurer:
45 Provided that the number of additional directors so appointed shall not, at any
time, exceed five or one-third of the maximum strength fixed for the Board by the
articles of association of the insurer, whichever is less.".
18
Omission of 40. Section 34G of the Insurance Act shall be omitted.

section 34G.
Amendment 41. In section 34H of the Insurance Act,—

of section
34H. (i) in sub-section (1), for the words "an officer authorised by the Authority", the
words "a Deputy Director or an equivalent officer" shall be substituted;
(ii) in sub-sections (7) and (8), for the words "Central Government", the words 5
"Securities Appellate Tribunal" shall be substituted.
of section 35.
"(1) Notwithstanding anything contained in any other law for the time
being in force, no insurance business of an insurer shall be transferred to or 10
amalgamated with the insurance business of any other insurer except in
accordance with a scheme prepared under this section and approved by the
Authority.";
(ii) in sub-section (3), for clauses (b) and (c), the following clauses shall be
substituted, namely :— 15
"(b) balance sheets in respect of the insurance business of each of the

insurers concerned in such amalgamation or transfer, prepared in such forms as
may be specified by the regulations;
(c) actuarial reports and abstracts in respect of the life insurance business
of each of the insurers so concerned, prepared in conformity with the regulations 20
specified in this regard.".
Substitution of 43. For section 36 of the Insurance Act, the following section shall be substituted,
new section
namely:—
for section
36.
Sanction of "36. When any application under sub-section (3) of section 35 is made to the
amalgamation Authority, the Authority shall cause, a notice of the application to be given to the 25
and transfer
by Authority.
holders of any kind of policy of insurer concerned alongwith statement of the nature
and terms of the amalgamation or transfer, as the case may be, to be published in such
manner and for such period as it may direct, and, after hearing the directors and
considering the objections of the policyholders and any other persons whom it
considers entitled to be heard, may approve the arrangement, and shall make such 30
consequential orders as are necessary to give effect to the arrangement.".
Amendment 44. In section 37A of the Insurance Act, for sub-section (4), the following sub-sections
of section shall be substituted, namely:—
37A.
"(4) The scheme shall thereafter be placed before the Central Government for its
sanction and the Central Government may sanction the scheme without any modification 35
or with such modifications as it may consider necessary, and the scheme as sanctioned
by the Central Government shall come into force on such date as the Central Government
may notify in this behalf in the Official Gazette:
Provided that different dates may be specified for different provisions of the
scheme. 40
(4A) Every policyholder or shareholder or member of each of the insurers, before
amalgamation, shall have the same interest in, or rights against the insurer resulting
from amalgamation as he had in the company of which he was originally a policyholder
or shareholder or member:
Provided that where the interests or rights of any shareholder or member are less 45
than his interest in, or rights against, the original insurer, he shall be entitled to
compensation, which shall be assessed by the Authority in such manner as may be
specified by the regulations.
19
(4B) The compensation so assessed shall be paid to the shareholder or member

by the insurance company resulting from such amalgamation.
(4C) Any member or shareholder aggrieved by the assessment of compensation
made by the Authority under sub-section (4A) may within thirty days from the
5 publication of such assessment prefer an appeal to the Securities Appellate Tribunal.".
45. For sections 38, 39 and 40 of the Insurance Act, the following sections shall be Substitution
substituted, namely:— of new
sections for
sections 38,
39 and 40.
"38. (1) A transfer or assignment of a policy of insurance, wholly or in part, Assignment
whether with or without consideration, may be made only by an endorsement upon the and transfer
of insurance
10 policy itself or by a separate instrument, signed in either case by the transferor or by
policies.
the assignor or his duly authorised agent and attested by at least one witness,
specifically setting forth the fact of transfer or assignment and the reasons thereof, the
antecedents of the assignee and the terms on which the assignment is made.
(2) An insurer may, accept the transfer or assignment, or decline to act upon any
15 endorsement made under sub-section (1), where it has sufficient reason to believe that
such transfer or assignment is not bona fide or is not in the interest of the policyholder
or in public interest or is for the purpose of trading of insurance policy.
(3) The insurer shall, before refusing to act upon the endorsement, record in
writing the reasons for such refusal and communicate the same to the policyholder not
20 later than thirty days from the date of the policyholder giving notice of such transfer or
assignment.
(4) Any person aggrieved by the decision of an insurer to decline to act upon
such transfer or assignment may within a period of thirty days from the date of receipt
of the communication from the insurer containing reasons for such refusal, prefer a
25 claim to the Authority.
(5) Subject to the provisions in sub-section (2), the transfer or assignment shall
be complete and effectual upon the execution of such endorsement or instrument duly
attested but except, where the transfer or assignment is in favour of the insurer, shall
not be operative as against an insurer, and shall not confer upon the transferee or
30 assignee, or his legal representative, any right to sue for the amount of such policy or
the moneys secured thereby until a notice in writing of the transfer or assignment and
either the said endorsement or instrument itself or a copy thereof certified to be correct
by both transferor and transferee or their duly authorised agents have been delivered
to the insurer:
35 Provided that where the insurer maintains one or more places of business in
India, such notice shall be delivered only at the place where the policy is being serviced.
(6) The date on which the notice referred to in sub-section (5) is delivered to the
insurer shall regulate the priority of all claims under a transfer or assignment as between
persons interested in the policy; and where there is more than one instrument of
40 transfer or assignment the priority of the claims under such instruments shall be
governed by the order in which the notices referred to in sub-section (5) are delivered:
Provided that if any dispute as to priority of payment arises as between assignees,
the dispute shall be referred to the Authority.
(7) Upon the receipt of the notice referred to in sub-section (5), the insurer shall
45 record the fact of such transfer or assignment together with the date thereof and the
name of the transferee or the assignee and shall, on the request of the person by whom
the notice was given, or of the transferee or assignee, on payment of such fee as may
be specified by the regulations, grant a written acknowledgement of the receipt of
such notice; and any such acknowledgement shall be conclusive evidence against the
50 insurer that he has duly received the notice to which such acknowledgment relates.
20
(8) Subject to the terms and conditions of the transfer or assignment, the insurer
shall, from the date of the receipt of the notice referred to in sub-section (5), recognise
the transferee or assignee named in the notice as the absolute transferee or assignee
entitled to benefit under the policy, and such person shall be subject to all liabilities
and equities to which the transferor or assignor was subject at the date of the transfer 5
or assignment and may institute any proceedings in relation to the policy, obtain a loan
under the policy or surrender the policy without obtaining the consent of the transferor
or assignor or making him a party to such proceedings.
Explanation.—Except where the endorsement referred to in sub-section (1)
expressly indicates that the assignment or transfer is conditional in terms of sub- 10
section (10) hereunder, every assignment or transfer shall be deemed to be an absolute
assignment or transfer and the assignee or transferee, as the case may be, shall be
deemed to be the absolute assignee or transferee respectively.
(9) Any rights and remedies of an assignee or transferee of a policy of life
insurance under an assignment or transfer effected prior to the commencement of the 15
Insurance Laws (Amendment) Act, 2015 shall not be affected by the provisions of this
section.
(10) Notwithstanding any law or custom having the force of law to the contrary,
an assignment in favour of a person made upon the condition that —
(a) the proceeds under the policy shall become payable to the policyholder 20
or the nominee or nominees in the event of either the assignee or transferee
predeceasing the insured; or
(b) the insured surviving the term of the policy, shall be valid:
Provided that a conditional assignee shall not be entitled to obtain a loan
on the policy or surrender a policy. 25
(11) In the case of the partial assignment or transfer of a policy of insurance

under sub-section (1), the liability of the insurer shall be limited to the amount secured
by partial assignment or transfer and such policyholder shall not be entitled to further
assign or transfer the residual amount payable under the same policy.
Nomination 39. (1) The holder of a policy of life insurance on his own life may, when effecting 30
by
the policy or at any time before the policy matures for payment, nominate the person or
policyholder.
persons to whom the money secured by the policy shall be paid in the event of his
death:
Provided that, where any nominee is a minor, it shall be lawful for the policyholder
to appoint any person in the manner laid down by the insurer, to receive the money 35
secured by the policy in the event of his death during the minority of the nominee.
(2) Any such nomination in order to be effectual shall, unless it is incorporated
in the text of the policy itself, be made by an endorsement on the policy communicated
to the insurer and registered by him in the records relating to the policy and any such
nomination may at any time before the policy matures for payment be cancelled or 40
changed by an endorsement or a further endorsement or a will, as the case may be, but
unless notice in writing of any such cancellation or change has been delivered to the
insurer, the insurer shall not be liable for any payment under the policy made bona fide
by him to a nominee mentioned in the text of the policy or registered in records of the
insurer. 45
(3) The insurer shall furnish to the policyholder a written acknowledgment of

having registered a nomination or a cancellation or change thereof, and may charge
such fee as may be specified by regulations for registering such cancellation or change.
(4) A transfer or assignment of a policy made in accordance with section 38 shall
automatically cancel a nomination: 45
21
Provided that the assignment of a policy to the insurer who bears the risk on the
policy at the time of the assignment, in consideration of a loan granted by that insurer
on the security of the policy within its surrender value, or its reassignment on repayment
of the loan shall not cancel a nomination, but shall affect the rights of the nominee only
5 to the extent of the insurer's interest in the policy:
Provided further that the transfer or assignment of a policy, whether wholly or in
part, in consideration of a loan advanced by the transferee or assignee to the
policyholder, shall not cancel the nomination but shall affect the rights of the nominee
only to the extent of the interest of the transferee or assignee, as the case may be, in the
10 policy:
Provided also that the nomination, which has been automatically cancelled
consequent upon the transfer or assignment, the same nomination shall stand
automatically revived when the policy is reassigned by the assignee or retransferred
by the transferee in favour of the policyholder on repayment of loan other than on a
15 security of policy to the insurer.
(5) Where the policy matures for payment during the lifetime of the person
whose life is insured or where the nominee or, if there are more nominees than one, all
the nominees die before the policy matures for payment, the amount secured by the
policy shall be payable to the policyholder or his heirs or legal representatives or the
20 holder of a succession certificate, as the case may be.
(6) Where the nominee or if there are more nominees than one, a nominee or
nominees survive the person whose life is insured, the amount secured by the policy
shall be payable to such survivor or survivors.
(7) Subject to the other provisions of this section, where the holder of a policy of
25 insurance on his own life nominates his parents, or his spouse, or his children, or his
spouse and children, or any of them, the nominee or nominees shall be beneficially
entitled to the amount payable by the insurer to him or them under sub-section (6)
unless it is proved that the holder of the policy, having regard to the nature of his title
to the policy, could not have conferred any such beneficial title on the nominee.
30 (8) Subject as aforesaid, where the nominee, or if there are more nominees than
one, a nominee or nominees, to whom sub-section (7) applies, die after the person
whose life is insured but before the amount secured by the policy is paid, the amount
secured by the policy, or so much of the amount secured by the policy as represents
the share of the nominee or nominees so dying (as the case may be), shall be payable
35 to the heirs or legal representatives of the nominee or nominees or the holder of a
succession certificate, as the case may be, and they shall be beneficially entitled to
such amount.
(9) Nothing in sub-sections (7) and (8) shall operate to destroy or impede the
right of any creditor to be paid out of the proceeds of any policy of life insurance.
40 (10) The provisions of sub-sections (7) and (8) shall apply to all policies of life
insurance maturing for payment after the commencement of the Insurance Laws
(Amendment) Act, 2015.
(11) Where a policyholder dies after the maturity of the policy but the proceeds
and benefit of his policy has not been made to him because of his death, in such a case,
45 his nominee shall be entitled to the proceeds and benefit of his policy.
(12) The provisions of this section shall not apply to any policy of life insurance
3 of 1874. to which section 6 of the Married Women's Property Act, 1874, applies or has at any
time applied:
Provided that where a nomination made whether before or after the commencement
50 of the Insurance Laws (Amendment) Act, 2015, in favour of the wife of the person who
has insured his life or of his wife and children or any of them is expressed, whether or
not on the face of the policy, as being made under this section, the said section 6 shall
be deemed not to apply or not to have applied to the policy.
22
Prohibition of 40. (1) No person shall, pay or contract to pay any remuneration or reward,
payment by whether by way of commission or otherwise for soliciting or procuring insurance
way of
commission business in India to any person except an insurance agent or an intermediary or
or otherwise insurance intermediary in such manner as may be specified by the regulations.
for procuring
business.
(2) No insurance agent or intermediary or insurance intermediary shall receive or 5
contract to receive commission or remuneration in any form in respect of policies
issued in India, by an insurer in any form in respect of policies issued in India, by an
insurer except in accordance with the regulations specified in this regard:
Provided that the Authority, while making regulations under sub-sections (1)
and (2), shall take into consideration the nature and tenure of the policy and in particular 10
the interest of the agents and other intermediaries concerned.
(3) Without prejudice to the provisions of section 102 in respect of a
contravention of any of the provisions of the preceding sub-sections or the regulations
framed in this regard, by an insurer, any insurance agent or intermediary or insurance
intermediary who contravenes the said provisions shall be liable to a penalty which 15
may extend to one lakh rupees .''.
Omission of 46. Section 40A of the Insurance Act shall be omitted.
section 40A.
Substitution of 47. For sections 40B and 40C of the Insurance Act, the following sections shall be
new sections substituted, namely:—
for sections
40B and 40C.
Limitation of "40B. No insurer shall, in respect of insurance business transacted by him in 20

expenses of
management India, spend as expenses of management in any financial year any amount exceeding
in life the amount as may be specified by the regulations made under this Act;
insurance
business.
Limitation of 40C. Every insurer transacting insurance business in India shall furnish to the
expenses of Authority, the details of expenses of management in such manner and form as may be
management specified by the regulations made under this Act.". 25
in general,
health
insurance and
re-insurance
business.
Amendment 48. In section 41 of the Insurance Act, for sub-section (2), the following sub-section
of section 41. shall be substituted, namely:—
"(2) Any person making default in complying with the provisions of this section
shall be liable for a penalty which may extend to ten lakh rupees.".
Substitution 49. For section 42 of the Insurance Act, the following section shall be substituted, 30
of new namely:—
section for
section 42.
Appointment "42. (1) An insurer may appoint any person to act as insurance agent for the
of insurance purpose of soliciting and procuring insurance business:
agents.
Provided that such person does not suffer from any of the disqualifications
mentioned in sub-section (3). 35
(2) No person shall act as an insurance agent for more than one life insurer, one
general insurer, one health insurer and one of each of the other mono-line insurers:
Provided that the Authority shall, while framing regulations, ensure that no
conflict of interest is allowed to arise for any agent in representing two or more insurers
for whom he may be an agent. 40
(3) The disqualifications referred to in the proviso to sub-section (1) shall be the
following:—
23
(a) that the person is a minor;

(b) that he is found to be of unsound mind by a court of competent
jurisdiction;
(c) that he has been found guilty of criminal misappropriation or criminal
5 breach of trust or cheating or forgery or an abetment of or attempt to commit any
such offence by a court of competent jurisdiction:
Provided that where at least five years have elapsed since the completion
of the sentence imposed on any person in respect of any such offence, the
Authority shall ordinarily declare in respect of such person that his conviction
10 shall cease to operate as a disqualification under this clause;
(d) that in the course of any judicial proceeding relating to any policy of
insurance or the winding up of an insurer or in the course of an investigation of
the affairs of an insurer it has been found that he has been guilty of or
has knowingly participated in or connived at any fraud, dishonesty or
15 misrepresentation against an insurer or insured;
(e) that in the case of an individual, who does not possess the requisite
qualifications or practical training or passed the examination, as may be specified
by the regulations;
(f) that in the case of a company or firm making, a director or a partner or
20 one or more of its officers or other employees so designated by it and in the case
of any other person the chief executive, by whatever name called, or one or more
of his employees designated by him, do not possess the requisite qualifications
or practical training and have not passed such an examination as required under
clauses (e) and (g);
25 (g) that he has not passed such examination as may be specified by the
regulations;
(h) that he has violated the code of conduct as may be specified by the
regulations.
(4) Any person who acts as an insurance agent in contravention of the provision
30 of this Act, shall be liable to a penalty which may extend to ten thousand rupees and
any insurer or any person acting on behalf of an insurer, who appoints any person as
an insurance agent not permitted to act as such or transacts any insurance business in
India through any such person shall be liable to penalty which may extend to one crore
rupees.
35 (5) The insurer shall be responsible for all the acts and omissions of its agents
including violation of code of conduct specified under clause (h) of sub-section (3)
and liable to a penalty which may extend to one crore rupees.".
50. For sections 42A, 42B and 42C of the Insurance Act, the following sections shall Substitution of
be substituted, namely:— new section
for sections
42A, 42B and
42C.
40 '42A. (1) No insurer shall, on or after the commencement of the Insurance Laws Prohibition of
(Amendment) Act, 2015, appoint any principal agent, chief agent, and special agent insurance
business
and transact any insurance business in India through them.
through
(2) No person shall allow or offer to allow, either directly or indirectly, as an principal
agent, special
inducement to any person to take out or renew or continue an insurance policy through agent and
45 multilevel marketing scheme. multilevel
marketing.
(3) The Authority may, through an officer authorised in this behalf, make a
complaint to the appropriate police authorities against the entity or persons involved
in the multilevel marketing scheme.
24
Explanation.—For the purpose of this section "multilevel marketing scheme"

means any scheme or programme or arrangement or plan (by whatever name called) for
the purpose of soliciting and procuring insurance business through persons not
authorised for the said purpose with or without consideration of whole or part of
commission or remuneration earned through such solicitation and procurement and 5
includes enrolment of persons into a multilevel chain for the said purpose either directly
or indirectly.'.
Amendment 51. In section 42D of the Insurance Act,—
of section
42D. (i) for the words "licence" and "licence issued", wherever they occur, the words
"registration" and "registration made", shall respectively be substituted; 10
(ii) in sub-section (1), in clause (a) of the proviso, for the word, brackets and
figure "sub-section (4)", the word, brackets and figure "sub-section (3)" shall be
substituted;
(iii) in sub-section (3),—
(a) after the words "directors or partners", the words "or one or more of its 15
officers or other employees so designated by it and in the case of any other
person, the chief executive by whatever name called, or one or more of his
employees designated by him" shall be inserted;
(b) for the words, brackets, letters and figures "in clauses (b), (c), (d), (e)
and (f) of sub-section (4) of section 42", the words, brackets, letters and figures 20
" in clauses (b), (c), (d), (e) and (g) of sub-section (3) of section 42" shall be
substituted;
(iv) for sub-sections (8) and (9), the following sub-sections, shall be substituted,
namely:—
"(8) Any person who acts as an intermediary or an insurance intermediary 25
without being registered under this section to act as such, shall be liable to a
penalty which may extend to ten lakh rupees and any person who appoints as an
intermediary or an insurance intermediary or any person not registered to act as
such or transacts any insurance business in India through any such person,
shall be liable to a penalty which may extend to one crore rupees. 30
(9) Where the person contravening sub-section (8) is a company or a firm,
then, without prejudice to any other proceedings which may be taken against
the company or firm, every director, manager, secretary or other officer of the
company, and every partner of the firm who is knowingly a party to such
contravention shall be liable to a penalty which may extend to ten lakh rupees.". 35
Substitution 52. For section 42E of the Insurance Act, the following section shall be substituted,
of new
section for
namely:—
section 42E.
Condition for "42E. Without prejudice to the provisions contained in this Act, the Authority
intermediary may, by regulations made in this behalf, specify the requirements of capital, form of
or insurance
intermediary.
business and other conditions, to act as an intermediary or an insurance intermediary.". 40
of new namely:—
section for
section 43.
Record of "43. (1) Every insurer and every person who, acting on behalf of an insurer
insurance employs insurance agents shall maintain a record showing the name and address of
agents. every insurance agent appointed by him and the date on which his appointment began 45
and the date, if any, on which his appointment ceased.
(2) The record prepared by the insurer under sub-section (1), shall be maintained
as long as the insurance agent is in service and for a period of five years after the
cessation of appointment.".
25
54. Section 44 of the Insurance Act shall be omitted. Omission of

section 44.
55. For sections 44A and 45 of the Insurance Act, the following sections shall be Substitution
sections for
sections 44A
and 45.
'44A. For the purposes of ensuring compliance with the provisions of sections Power to call
5 40, 40B and 40C, the Authority may, by notice— for
information.
(a) require from an insurer such information, certified if so required by an
auditor or actuary, as it may consider necessary;
(b) require an insurer to submit for its examination at the principal place of
business of the insurer in India, any books of account, register or other document,
10 or to supply any statement which may be specified in the notice;
(c) examine any officer of an insurer on oath, in relation to any such
information, book, register, document or statement and the insurer, shall comply
with any such requirement within such time as may be specified in the notice.
45. (1) No policy of life insurance shall be called in question on any ground Policy not be
15 whatsoever after the expiry of three years from the date of the policy, i.e., from the date called in
of issuance of the policy or the date of commencement of risk or the date of revival of question on
ground of
the policy or the date of the rider to the policy, whichever is later. misstatement
(2) A policy of life insurance may be called in question at any time within three after three
years.
years from the date of issuance of the policy or the date of commencement of risk or the
20 date of revival of the policy or the date of the rider to the policy, whichever is later, on
the ground of fraud:
Provided that the insurer shall have to communicate in writing to the insured or
the legal representatives or nominees or assignees of the insured the grounds and
materials on which such decision is based.
25 Explanation I.—For the purposes of this sub-section, the expression "fraud"
means any of the following acts committed by the insured or by his agent, with intent
to deceive the insurer or to induce the insurer to issue a life insurance policy:—
(a) the suggestion, as a fact of that which is not true and which the insured
does not believe to be true;
30 (b) the active concealment of a fact by the insured having knowledge or
belief of the fact;
(c) any other act fitted to deceive; and
(d) any such act or omission as the law specially declares to be fraudulent.
Explanation II.—Mere silence as to facts likely to affect the assessment of the
35 risk by the insurer is not fraud, unless the circumstances of the case are such that
regard being had to them, it is the duty of the insured or his agent keeping silence, to
speak, or unless his silence is, in itself, equivalent to speak.
(3) Notwithstanding anything contained in sub-section (2), no insurer shall
repudiate a life insurance policy on the ground of fraud if the insured can prove that
40 the misstatement of or suppression of a material fact was true to the best of his
knowledge and belief or that there was no deliberate intention to suppress the fact or
that such misstatement of or suppression of a material fact are within the knowledge of
the insurer:
Provided that in case of fraud, the onus of disproving lies upon the beneficiaries,
45 in case the policyholder is not alive.
26
Explanation.—A person who solicits and negotiates a contract of insurance

shall be deemed for the purpose of the formation of the contract, to be the agent of the
insurer.
(4) A policy of life insurance may be called in question at any time within three
years from the date of issuance of the policy or the date of commencement of risk or the 5
date of revival of the policy or the date of the rider to the policy, whichever is later, on
the ground that any statement of or suppression of a fact material to the expectancy of
the life of the insured was incorrectly made in the proposal or other document on the
basis of which the policy was issued or revived or rider issued:
Provided that the insurer shall have to communicate in writing to the insured or 10
the legal representatives or nominees or assignees of the insured the grounds and
materials on which such decision to repudiate the policy of life insurance is based:
Provided further that in case of repudiation of the policy on the ground of
misstatement or suppression of a material fact, and not on the ground of fraud, the
premiums collected on the policy till the date of repudiation shall be paid to the insured 15
or the legal representatives or nominees or assignees of the insured within a period of
ninety days from the date of such repudiation.
Explanation.—For the purposes of this sub-section, the mis-statement of or
suppression of fact shall not be considered material unless it has a direct bearing on
the risk undertaken by the insurer, the onus is on the insurer to show that had the 20
insurer been aware of the said fact no life insurance policy would have been issued to
the insured.
(5) Nothing in this section shall prevent the insurer from calling for proof of age
at any time if he is entitled to do so, and no policy shall be deemed to be called in
question merely because the terms of the policy are adjusted on subsequent proof that 25
the age of the life insured was incorrectly stated in the proposal.'.
Omission of 56. Sections 47A and 48 of the Insurance Act shall be omitted.
sections 47A
and 48.
Substitution 57. For section 48A of the Insurance Act, the following section shall be substituted,
of new
section for namely:—
section 48A.
Insurance "48A. No insurance agent or intermediary or insurance intermediary shall be 30
agent or eligible to be or remain a director in insurance company:
intermediary
or insurance Provided that any director holding office at the commencement of the Insurance
intermediary
Laws (Amendment) Act, 2015 shall not become ineligible to remain a director by reason
not to be
director in of this section until the expiry of six months from the date of commencement of the said
insurance Act: 35
company.
Provided further that the Authority may permit an agent or intermediary or
insurance intermediary to be on the Board of an insurance company subject to such
conditions or restrictions as it may impose to protect the interest of policyholders or to
avoid conflict of interest.".
Amendment 58. In section 49 of the Insurance Act, in sub-section (1),—
of section 49. 40
(i) the words, brackets, letters and figures "being an insurer specified in sub-
clause (a) (ii) or sub-clause (b) of clause (9) of section 2" shall be omitted;
(ii) the words and figures "or to the Central Government under section 11 of the
Indian Life Insurance Companies Act, 1912" shall be omitted. 7 of 1912.
27
59. For sections 52 and 52A of the Insurance Act, the following sections shall be Substitution
sections for
sections 52
and 52A.
"52. No insurer shall commence any business upon the dividing principle, that is Prohibition of
to say, on the principle that the benefit secured by a policy is not fixed but depends business on
dividing
5 either wholly or partly on the result of a distribution of certain sums amongst policies
principle.
becoming claims within certain time-limits, or on the principle that the premiums payable
by a policyholder depend wholly or partly on the number of policies becoming claims
within certain time-limits:
Provided that nothing in this section shall be deemed to prevent an insurer from
10 allocating bonuses to holders of policies of life insurance as a result of a periodical
actuarial valuation either as reversionary additions to the sums insured or as immediate
cash bonuses or otherwise.
52A. (1) If at any time the Authority has reason to believe that an insurer carrying When
on life insurance business is acting in a manner likely to be prejudicial to the interests Administrator
for
15 of holders of life insurance policies, it may, after giving such opportunity to the insurer management
to be heard appoint an Administrator to manage the affairs of the insurer under the of insurance
direction and control of the Authority. business may
be appointed.
(2) The Administrator shall receive such remuneration as the Authority may
direct and the Authority may at any time cancel the appointment and appoint some
20 other person as Administrator.".
60. In section 52BB of the Insurance Act,— Amendment
of section
(a) in sub-section (2), for the words "the Central Government and the Central 52BB.
Government", the words "the Securities Appellate Tribunal and the Securities Appellate
Tribunal" shall be substituted;
25 (b) in sub-section (3), for the words "Central Government", the words "Securities
Appellate Tribunal" shall be substituted;
(c) in sub-section (10), in clause (a), the words "or the Central Government"
shall be omitted.
61. For section 52D of the Insurance Act, the following section shall be substituted, Substitution
section for
section 52D.
"52D. If at any time, it appears to the Authority that the purpose of the order Termination
appointing the Administrator has been fulfilled or that, for any reason, it is undesirable of
appointment
that the order of appointment should remain in force, the Authority may cancel the of
order and thereupon the Administrator shall be divested of the management of the Administrator.
35 insurance business which shall, unless otherwise directed by the Authority, again
vest in the person in whom it was vested immediately prior to the appointment of the
Administrator or any other person appointed by the insurer in this behalf.".
62. In section 52E of the Insurance Act, for the words "Central Government", the word Amendment
"Authority" shall be substituted. of section
52E.
40 63. In section 52F of the Insurance Act, for the words "punishable with imprisonment Amendment
which may extend to six months, or with fine which may extend to one thousand rupees, or of section
52F.
with both", the words "liable to penalty of rupees ten thousand each day during which such
failure continues or rupees ten lakh, whichever is less" shall be substituted.
64. In section 52G of the Insurance Act, in sub-section (2), the words "Central Amendment
Government or" shall be omitted. of section
45 52G.
28
Omission of 65. Sections 52H, 52-I, 52J, 52K, 52L, 52M and 52N of the Insurance Act shall be
sections 52H, omitted.
52-I, 52J,
52K, 52L,
52M and
52N.

of section 53.
(a) in sub-section (1), the following Explanation shall be inserted at the end,
namely:— 5
‘Explanation.—For the purpose of sections 53 to 61A, "Tribunal" means

the National Company Law Tribunal constituted under sub-section (1) of section
408 of the Companies Act, 2013.’; 18 of 2013.
(b) in sub-section (2), in clause (b), sub-clause (i), shall be omitted.

Amendment 67. In section 58 of the Insurance Act, for sub-section (4), the following sub-section 10
of section 58. shall be substituted, namely:—
"(4) An order of the Tribunal confirming a scheme under this section whereby
the memorandum of a company is altered with respect to its objects shall as respects
the alteration have effect as if it were an order confirmed under section 4 of the
Companies Act, 2013, and the provisions of sections 7 and 17 of that Act shall apply 1 5 18 of 2013.
accordingly.".
Omission of 68. Section 59 of the Insurance Act shall be omitted.
section 59.
Amendment 69. In PART II A of the Insurance Act, for the heading "Insurance Association of
of heading. India, Councils of The Association and Committees Thereof" the following heading shall be
substituted, namely:— 20
"Life Insurance Council and General Insurance Council and Committees Thereof.".
Omission of 70. Sections 64A and 64B of the Insurance Act shall be omitted.
sections 64A
and 64B.
Substitution 71. For sections 64C and 64D of the Insurance Act the following sections shall be
of new substituted, namely :—
sections for
sections 64C
and 64D.
Councils of "64C. On and from the date of commencement of this Act,— 25

Life Insurance
and General (a) the existing Life Insurance Council, a representative body of the
Insurance. insurers, who carry on the life insurance business in India; and
(b) the existing General Insurance Council, a representative body of
insurers, who carry on general, health insurance business and re-insurance in
India, 30
shall be deemed to have been constituted as the respective Councils under this Act.
Authorisation 64D. It shall be lawful for any member of the Life Insurance Council or the
to represent General Insurance Council to authorise any of its officer to act as the representative of
in Councils. such member at any meeting of the Council concerned.".
Substitution 72. For section 64F of the Insurance Act, the following section shall be substituted, 35
of new namely:—
section for
section 64F.
29
"64F. (1) The Executive Committee of the Life Insurance Council shall consist of Executive
the following persons, namely:— Committees
of the Life
(a) four representatives of members of the Life Insurance Council elected Insurance
Council and
in their individual capacity by the members in such manner as may be laid down the General
5 in the bye-laws of the Council; Insurance
Council.
(b) an eminent person not connected with insurance business, nominated
by the Authority;
(c) three persons to represent insurance agents, intermediaries and
policyholders respectively as may be nominated by the Authority;
10 (d) one representative each from self-help groups and Insurance Co-
operative Societies:
Provided that one of the representatives as mentioned in clause (a) shall
be elected as the Chairperson of the Executive Committee of the Life Insurance
Council.
15 (2) The Executive Committee of the General Insurance Council shall consist of
the following persons, namely:—
(a) four representatives of members of the General Insurance Council
elected in their individual capacity by the members in such manner as may be
laid down in the bye-laws of the Council;
20 (b) an eminent person not connected with insurance business, nominated
by the Authority; and
(c) four persons to represent insurance agents, third party administrators,
surveyors and loss assessors and policyholders respectively as may be
nominated by the Authority:
25 Provided that one of the representatives as mentioned in clause (a) shall
be elected as the Chairperson of the Executive Committee of the General Insurance
Council.
(3) If anybody of persons specified in sub-sections (1) and (2) fails to elect any
of the members of the Executive Committees of the Life Insurance Council or the
30 General Insurance Council, the Authority may nominate any person to fill the vacancy,
and any person so nominated shall be deemed to be a member of the Executive
Committee of the Life Insurance Council or the General Insurance Council, as the case
may be, as if he had been duly elected thereto.
(4) Each of the said Executive Committees may make bye-laws for the transaction
35 of any business at any meeting of the said Committee.
(5) The Life Insurance Council or the General Insurance Council may form such
other committees consisting of such persons as it may think fit to discharge such
functions as may be delegated thereto.
(6) The Secretary of the Executive Committee of the Life Insurance Council and
40 of the Executive Committee of the General Insurance Council shall in each case be
appointed by the Executive Committee concerned:
Provided that each Secretary appointed by the Executive Committee concerned
shall exercise all such powers and do all such acts as may be authorised in this behalf
by the Executive Committee concerned.".
45 73. In section 64G of the Insurance Act, in sub-section (2), for the words "by nomination Amendment
by the Authority", the words "in such manner as may be laid down in the bye-laws of the of section
64G.
Council concerned" shall be substituted.
30
Omission of 74. Section 64-I of the Insurance Act shall be omitted.

section 64-I.
Amendment 75. In section 64J of the Insurance Act, for sub-section (2), the following sub-section
64J.
"(2) For the purpose of enabling it to effectively discharge its functions, the
Executive Committee of the Life Insurance Council may collect such fees as may be laid 5
down in the bye-laws made by the Council from the insurers carrying on life insurance
business.".
Amendment 76. In section 64L of the Insurance Act, for sub-section (2), the following sub-section
64L.
''(2) For the purpose of enabling it to effectively discharge its functions, the 10
Executive Committee of the General Insurance Council may collect such fees as may be
laid down in the bye-laws made by the Council from the insurers carrying on general
insurance business.''.
Amendment 77. In section 64N of the Insurance Act, for the words "the Central Government may
of section prescribe", the words "the Authority may specify" shall be substituted. 15
64N.
Amendment 78. In section 64R of the Insurance Act, in sub-section (1),—

of section
64R. (a) for clause (c), the following clause shall be substituted, namely:—
"(c) keep and maintain up-to-date, a copy of list of all insurers who are
members of the either Council;";
(b) in clause (d), for the words "with the previous approval of the Authority 20
make regulations for", the words "make bye-laws for" shall be substituted.
Omission of 79. Sections 64S and 64T of the Insurance Act shall be omitted.
sections 64S
and 64T.
Omission of 80. Sections 64U, 64UA, 64UB, 64UC, 64UD, 64UE, 64UF, 64UG, 64UH, 64U-I, 64UJ,
sections 64U, 64UK and 64UL of the Insurance Act shall be omitted.
64UA, 64UB,
64UC, 64UD,
64UE, 64UF,
64UG, 64UH,
64U-I, 64UJ,
64UK and
64UL.
Insertion of 81. After section 64UL of the Insurance Act, the following section shall be inserted, 25
new section namely:—
64ULA.
Transitional "64ULA. (1) Notwithstanding anything contained in this Part, until the rates,
provisions. advantage and terms and conditions laid down by the Advisory Committee under
section 64UC are de-notified by the Authority with effect from such date as the Authority
may by notification in the Official Gazette determine, and the rates, advantages and 30
terms and conditions are decided by the insurer concerned, the rates, advantages and
terms and conditions notified by the Advisory Committee shall continue to be in force
and shall always be deemed to have been in force and any such rates, advantages and
terms and conditions shall be binding on all the insurers.
(2) The Authority shall, in consultation with the Central Government, prepare a 35
scheme for the existing employees of the Tariff Advisory Committee on its dissolution,
keeping in view the interests of such employees on such terms and conditions as it
may, by order, determine.’’.
31
82. For section 64UM of the Insurance Act, the following section shall be substituted, Substitution
namely:— of new
section for
section
64UM.
‘64UM. (1) Save as otherwise provided in this section, no person shall act as a Surveyors or
surveyor or loss assessor in respect of general insurance business after the expiry of loss assessors.
5 a period of one year from the commencement of the Insurance Laws (Amendment) Act,
2015, unless he—
(a) possesses such academic qualifications as may be specified by the
regulations made under this Act; and
(b) is a member of a professional body of surveyors and loss assessors,
10 namely, the Indian Institute of Insurance Surveyors and Loss Assessors:
Provided that in the case of a firm or company, all the partners or directors
or other persons, who may be called upon to make a survey or assess a loss
reported, as the case may be, shall fulfil the requirements of clauses (a) and (b).
(2) Every surveyor and loss assessor shall comply with the code of conduct in
15 respect of his duties, responsibilities and other professional requirements, as may be
specified by the regulations made under the Act.
(3) Notwithstanding anything contained in the foregoing provisions, a class or
class of persons acting as a licensed surveyor or loss assessor prior to the
commencement of the Insurance Laws (Amendment) Act, 2015 shall continue to act as
20 such for such period as may be specified by the regulations made under this Act:
Provided that the surveyor or loss assessor shall, within the period as may be
notified by the Authority, satisfy the requirements of clause (a) and clause (b) of sub-
section (1), failing which, the surveyor or loss assessor shall be automatically
disqualified to act as a surveyor or loss assessor.
25 (4) No claim in respect of a loss which has occurred in India and requiring to be
paid or settled in India equal to or exceeding an amount specified in the regulations by
the Authority in value on any policy of insurance, arising or intimated to an insurer at
any time after the expiry of a period of one year from the commencement of the Insurance
Laws (Amendment) Act, 2015, shall, unless otherwise directed by the Authority, be
30 admitted for payment or settled by the insurer unless he has obtained a report, on the
loss that has occurred, from a person who holds a licence issued under this section to
act as a surveyor or loss assessor (hereafter referred to as "approved surveyor or loss
assessor"):
Provided that nothing in this sub-section shall be deemed to take away or abridge
35 the right of the insurer to pay or settle any claim at any amount different from the
amount assessed by the approved surveyor or loss assessor.
(5) The Authority may, at any time, in respect of any claim of the nature referred
to in sub-section (4), call for an independent report from any other approved surveyor
or loss assessor specified by him and such surveyor or loss assessor shall furnish
40 such report to the Authority within such time as may be specified by the Authority or
if no time limit has been specified by him within a reasonable time and the cost of, or
incidental to, such report shall be borne by the insurer.
(6) The Authority may, on receipt of a report referred to in sub-section (5), issue
such directions as it may consider necessary with regard to the settlement of the claim
45 including any direction to settle a claim at a figure less than, or more than, that at which
it is proposed to settle it or it was settled and the insurer shall be bound to comply with
such directions:
32
Provided that where the Authority issues a direction for settling a claim at a
figure lower than that at which it has already been settled, the insurer shall be deemed
to comply with such direction if he satisfies the Authority that all reasonable steps,
with due regard to the question whether the expenditure involved is not disproportionate
to the amount required to be recovered, have been taken with due despatch by him: 5
Provided further that no direction for the payment of a lesser sum shall be made
where the amount of the claim has already been paid and the Authority is of opinion
that the recovery of the amount paid in excess would cause undue hardship to the
insured:
Provided also that nothing in this section shall relieve the insurer from any 10
liability, civil or criminal, to which he would have been subject but for the provisions of
this sub-section.
(7) No insurer shall, after the expiry of a period of one year from the
commencement of the Insurance Laws (Amendment) Act, 2015 pay to any person any
fee or remuneration for surveying, verifying or reporting on a claim of loss under a 15
policy of insurance unless the person making such survey, verification or report is an
approved surveyor or loss assessor.
(8) Where, in the case of a claim of less than the amount specified in sub-section (4)
in value on any policy of insurance it is not practicable for an insurer to employ an
approved surveyor or loss assessor without incurring expenses disproportionate to 20
the amount of the claim, the insurer may employ any other person (not being a person
disqualified for the time being for being employed as a surveyor or loss assessor) for
surveying such loss and may pay such reasonable fee or remuneration to the person
so employed as he may think fit.
(9) The Authority may in respect of any claim of value of less than the amount 25
specified in sub-section (4) on an insurance policy, if the claim has not been or is not
proposed to be reported upon by a surveyor or loss assessor, direct that such claim
shall be reported upon by an approved surveyor or loss assessor and where the
Authority makes such direction, the provisions of sub-sections (5) and (6) shall apply
in respect of such claim. 30
(10) Where, in relation to any class of claims, the Authority is satisfied that it is
customary to entrust the work of survey or loss assessment to any person other than
a licensed surveyor or loss assessor, or it is not practicable to make any survey or loss
assessment, it may, by an order, exempt such class of claims from the operation of this
section.’. 35
Substitution 83. For sections 64V and 64VA of the Insurance Act, the following sections shall be
of new substituted, namely:—
sections for
sections 64V
and 64VA.
Assets and "64V. (1) For the purpose of ascertaining compliance with the provisions of
liabilities how section 64VA, assets shall be valued at value not exceeding their market or realisable
to be valued.
value and certain assets may be excluded by the Authority in the manner as may be 40
specified by the regulations made in this behalf.
(2) A proper value shall be placed on every item of liability of the insurer in the
manner as may be specified by the regulations made in this behalf.
(3) Every insurer shall furnish to the Authority along with the returns required to
be filed under this Act, a statement, certified by an Auditor, approved by the Authority, 45
in respect of general insurance business or an actuary approved by the Authority in
respect of life insurance business, as the case may be, of his assets and liabilities
assessed in the manner required by this section as on the 31st day of March of each
year within such time as may be specified by the regulations.
33
64VA. (1) Every insurer and re-insurer shall at all times maintain an excess of Sufficiency of
value of assets over the amount of liabilities of, not less than fifty per cent. of the assets.
amount of minimum capital as stated under section 6 and arrived at in the manner
specified by the regulations.
5 (2) An insurer or re-insurer, as the case may be, who does not comply with sub-
section (1), shall be deemed to be insolvent and may be wound-up by the court on an
application made by the Authority.
(3) The Authority shall by way of regulation made for the purpose, specify a
level of solvency margin known as control level of solvency on the breach of which
10 the Authority shall act in accordance with the provisions of sub-section (4) without
prejudice to taking of any other remedial measures as deemed fit:
Provided that if in respect of any insurer the Authority is satisfied that either by
reason of an unfavourable claim experience or because of a sharp increase in the
volume of new business, or for any other reason, compliance with the provisions of
15 this sub-section shall cause undue hardship to the insurer, it may direct that for such
period and subject to such conditions as it may specify, the provisions of this
sub-section shall apply to that insurer with such modifications provided that such
modifications shall not result in the control level of solvency being less than what is
stipulated under sub-section (1).
20 (4) If, at any time, an insurer or re-insurer does not maintain the required control
level of solvency margin, he shall, in accordance with the directions issued by the
Authority, submit a financial plan to the Authority, indicating a plan of action to
correct the deficiency within a specified period not exceeding six months.
(5) An insurer who has submitted a plan, as required under sub-section (4), the
25 Authority shall propose modifications to the plan, if the Authority considers the same
inadequate, and in such an eventuality, the Authority shall give directions, as may be
deemed necessary, including direction in regard to transacting any new business, or,
appointment of an administrator or both.
(6) An insurer or re-insurer, as the case may be, who does not comply with the
30 provisions of sub-section (4) shall be deemed to have made default in complying with
the requirements of this section.
(7) The Authority shall be entitled at any time to take such steps as it may
consider necessary for the inspection or verification of the assets and liabilities of any
insurer or re-insurer, or for securing the particulars necessary to establish that the
35 requirements of this section have been complied with as on any date, and the insurer
or re-insurer, as the case may be, shall comply with any requisition made in this behalf
by the Authority, and in the event of any failure to do so within two months from the
receipt of the requisition, the insurer or re-insurer, as the case may be, shall be deemed
to have made default in complying with the requirements of this section.
40 (8) In applying the provisions of sub-section (1) to any insurer or re-insurer, as
the case may be, who is a member of a group, the relevant amount for that insurer shall
be an amount equal to that proportion of the relevant amount which that group, if
considered as a single insurer, would have been required to maintain as the proportion
of his share of the risk on each policy issued by the group bears to the total risk on that
45 policy:
Provided that when a group of insurers ceases to be a group, every insurer in
that group who continues to carry on any class of insurance business in India shall
comply with the requirements of sub-section (1) as if he had not been an insurer in a
group at any time:
34
Provided further that it shall be sufficient compliance of the provisions of the

foregoing proviso if the insurer brings up the excess of the value of his assets over the
amount of his liabilities to the required amount within a period of six months from the
date of cessation of the group:
Provided also that the Authority may, on sufficient cause being shown, extend 5
the said period of six months by such further periods as it may think fit, so, however
that the total period may not in any case exceed one year.
(9) Every insurer shall furnish to the Authority return giving details of solvency
margin in such form, time, manner including its authentication as may be specified by
the regulations.". 10
Substitution 84. For section 64VC of the Insurance Act, the following section shall be substituted,
of new namely:—
section for
section 64VC.
Restrictions ''64VC. No insurer shall, after the commencement of the Insurance (Amendment)
on opening of Act, 1968, open a new place of business or close a place in India or outside India or 62 of 1968.
new place of
business. change otherwise than within the same city, town or village, the location of an existing 15
place of business situated in India or outside India, except in the manner as may be
specified by the regulations.''.
Omission of 85. PART III and PART IIIA of the Insurance Act shall be omitted.
Part III and
Part IIIA.
Omission of 86. PART IV of the Insurance Act shall be omitted.

Part IV.
Amendment 87. In section 102 of the Insurance Act, for the words "not exceeding five lakh rupees 20
of section for each such failure and punishable with fine", the words "of one lakh rupees for each day
102.
during which such failure continues or one crore rupees, whichever is less" shall be
substituted.
Substitution of 88. For sections 103 and 104 of the Insurance Act, the following sections shall be
new sections substituted, namely:— 25
for sections
103 and 104.
Penalty for "103. If a person carries on the business of insurance without obtaining a certificate
carrying on of registration under section 3, he shall be liable to a penalty not exceeding rupees
insurance
business in
twenty-five crores and with imprisonment which may extend to ten years.
contravention
of section 3.
Penalty for 104. If a person fails to comply with the provisions of section 27, section 27A,
contravention section 27B, section 27D and section 27E, he shall be liable to a penalty not exceeding 30
of sections
27, 27A, 27B,
twenty-five crore rupees.".
27D and 27E.
Amendment 89. In section 105 of the Insurance Act, for the words "not exceeding two lakh rupees
of section for each such failure", the words "not exceeding one crore rupees" shall be substituted.
105.
Substitution 90. For sections 105B and 105C of the Insurance Act, the following sections shall be
of new substituted, namely :— 35
sections for
sections 105B
and 105C.
35
"105B. If an insurer fails to comply with the provisions of section 32B, section 32C Penalty for
and section 32D, he shall be liable to a penalty not exceeding twenty-five crore rupees. failure to
comply with
sections 32B,
32C and 32D.
105C.(1) For the purpose of adjudication under sub-section (2) of section 2CB, Power to
sub-section (4) of section 34B, sub-section (3) of section 40, sub-section (2) of section adjudicate.
5 41, sub-sections (4) and (5) of section 42, sub-sections (8) and (9) of section 42D,
section 52F and section 105B, the Authority, shall appoint any officer not below the
rank of a Joint Director or an equivalent officer to be an adjudicating officer for holding
an inquiry in the prescribed manner after giving any person concerned a reasonable
opportunity of being heard.
10 (2) Upon receipt of the inquiry report from the officer so appointed, the Authority,
after giving an opportunity of being heard to the person concerned, may impose any
penalty provided in sections aforesaid.
(3) While holding an inquiry, the adjudicating officer shall have power to summon
and enforce the attendance of any person acquainted with the facts and circumstances
15 of the case to give evidence or to produce any document which in the opinion of the
adjudicating officer, may be useful for or relevant to the subject matter of the inquiry
and if on such inquiry, is satisfied that the person has failed to comply with the
provisions of any of the sections specified in sub-section (1), he may recommend such
penalty as he thinks fit in accordance with the provisions of any of those sections.
20 105D. While recommending the quantum of penalty under section 105C, the Factors to be
adjudicating officer and while imposing such penalty, the Authority shall have due taken into
account by
regard to the following factors, namely:— the
adjudicating
(a) the amount of disproportionate gain or unfair advantage, wherever
officer.
quantifiable, made as a result of the default;
25 (b) the amount of loss caused to the policyholders as a result of the
default; and
(c) the repetitive nature of default.".
91. In section 106A of the Insurance Act, in sub-section (12),— Amendment
of section
(i) clauses (a), (b) and (f) shall be omitted; 106A.
30 (ii) in clause (d), the words "or a provident society" shall be omitted.
92. Sections 107 and 107A of the Insurance Act shall be omitted. Omission of
section 107
and 107A.
namely:— of new
section for
section 109.
"109. No court shall take cognizance of any offence punishable under this Act or Cognizance
35 any rules or any regulations made thereunder, save on a complaint made by an officer of offence.
of the Authority or by any person authorised by it.".
namely:— of new
section for
section 110.
"110. (1) Any person aggrieved— Appeal to

Securities
40 (a) by an order of the Authority made on and after the commencement of the Appellate
Tribunal.
36
Insurance Laws (Amendment) Act, 2015, or under this Act, the rules or regulations
made thereunder; or
(b) by an order made by the Authority by way of adjudication under this
Act,
may prefer an appeal to the Securities Appellate Tribunal having jurisdiction in the 5
matter.
(2) Every appeal made under sub-section (1) shall be filed within a period of
forty-five days from the date on which a copy of the order made by the Authority is
received by him and it shall be in such a form and be accompanied by such fees as may
be prescribed: 10
Provided that the Securities Appellate Tribunal may entertain an appeal after the
expiry of the said period of forty-five days if it is satisfied that there was sufficient
cause for not filing it within that period.
(3) On receipt of an appeal under sub-section (1), the Securities Appellate Tribunal
may, after giving parties to the appeal an opportunity of being heard, pass such orders 15
thereon as it thinks fit, conforming, modifying or setting aside the order appealed
against.
(4) The Securities Appellate Tribunal shall make available copy of order made by
it to the Authority and parties.
(5) The appeal filed before the Securities Appellate Tribunal under sub-section (1) 20
shall be dealt with by it as expeditiously as possible and endeavour shall be made by
it to dispose of the appeal finally within six months from the date of receipt of appeal.
(6) The procedure for filing and disposing of an appeal shall be such as may be
prescribed.
(7) The provision contained in section 15U, section 15V, section 15W, section 25
15Y and section 15Z of the Securities and Exchange Board of India Act, 1992 shall
apply to the appeals arising out of the provisions of this Act, as they apply to the
appeals under the Securities and Exchange Board of India Act, 1992.’’. 15 of 1992.
Omission of 95. Section 110E of the Insurance Act shall be omitted.

section 110E.
Omission of 96. Sections 110G and 110H of the Insurance Act shall be omitted. 30
sections 110G
and 110H.
Insertion of 97. After section 110H of the Insurance Act, the following section shall be inserted,
110HA.
Penalty to be ''110HA. Any penalty imposed by the Authority under this Act shall be
recoverable as recoverable as an arrear of land revenue.".
arrear of land
revenue.
Amendment 98. In section 111 of the Insurance Act,— 35
of section
111. (a) in sub-section (1), the words "or provident society" occurring at both the
places shall be omitted;
(b) in sub-section (2), in the proviso, the words "or to a provident society" shall
be omitted.
Substitution of 99. For section 113 of the Insurance Act, the following section shall be substituted, 40
for section
113.
37
"113. (1) A policy of life insurance shall acquire surrender value as per the norms Acquisition of
specified by the regulations. surrender
value by
(2) Every policy of life insurance shall contain the formula as approved by the policy.
Authority for calculation of guaranteed surrender value of the policy.
5 (3) Notwithstanding any contract to the contrary, a policy of life insurance
under a non-linked plan which has acquired a surrender value shall not lapse by
reason of non-payment of further premiums but shall be kept in force to the extent of
paid-up sum insured, calculated by means of a formula as approved by the Authority
and contained in the policy and the reversionary bonuses that have already been
10 attached to the policy:
Provided that a policy of life insurance under a linked plan shall be kept in force
in the manner as may be specified by the regulations.
(4) The provisions of sub-section (3) shall not apply—
(i) where the paid-up sum insured by a policy, inclusive of attached
15 bonuses, is less than the amount specified by the Authority or takes the form of
annuity of amount less than the amount specified by the Authority; or
(ii) when the parties, after the default has occurred in payment of the
premium, agree in writing to other arrangement.".
of section
20 (a) in sub-section (2),— 114.
(i) clause (aa) shall be omitted;

(ii) after clause (aa) as so omitted, the following clause shall be inserted,
namely:—
"(aaa) the manner of ownership and control of Indian insurance
25 company under sub-clause (b) of clause (7A) of section 2;";
(iii) clause (c) and clause (f) shall be omitted;
(iv) after clause (l), the following clauses shall be inserted, namely:—
"(la) the manner of inquiry under sub-section (l) of section 105C;
(lb) the form in which an appeal may be preferred under sub-section (2)
30 and the fee payable in respect of such appeal and the procedure for filing
and disposing of an appeal under sub-section (6) of section 110;’’;
(b) in sub-section (3), the words, brackets, figures and letters "or under
sub-section (1) of section 64UB and every regulation made under sub-section
(3) of section 64UB" shall be omitted.
35 101. In section 114A of the Insurance Act, in sub-section (2),— Amendment
of section
(i) for clauses (a) and (aa), the following clause shall be substituted, namely:— 114A.
"(a) manner of making application for registration and documents to be

accompanied under sub-section (2) of section 3;";
(ii) for clause (d), the following clause shall be substituted, namely:—
40 "(d) such annual fee to the Authority and manner of payment under sub-
section (1) of section 3A;";
(iii) after clause (d), the following clauses shall be inserted, namely:—
"(da) such minimum annuity and other benefits to be secured by the
insurer under section 4;
38
(daa) determination of preliminary expenses that may be excluded for

calculation of the stipulated paid-up equity capital for the insurers under
sub-section (1) of section 6;
(db) such equity capital and such forms of capital including hybrid capital
required under sub-section (I) of section 6A;"; 5
(iv) clause (e) shall be omitted;

(v) after clause (e), as so omitted, the following clause shall be inserted, namely:—
"(ea) separation of account of all receipts and payments in respect of each
classes and sub-classes of insurance business as required under sub-section (1)
and sub-section (2AA) of section 10; and its waiver under the said section;"; 10
(vi) in clause (f), for the words, brackets, figures and letter "under sub-section (1A)
of section 11", the words, brackets and figures "under sub-section (1) of section 11"
shall be substituted;
(vii) for clause (g), the following clause shall be substituted, namely:—
"(g) the manner in which an abstract of the report of the actuary to be 15
specified and the form and manner in which the statement referred to in section
13 shall be appended;";
(viii) after clause (g), the following clauses shall be inserted, namely:—
"(ga) maintenance of records of policies and claims under clause (c) of
sub-section (1) of section 14; 20
(gb) manner and form of issuance of policies in electronic form under sub-
section (2) of section 14;";
(ix) for clause (h), the following clause shall be substituted, namely:—
"(h) the fee for procuring a copy of return or any part thereof under
sub-section (I) of section 20;"; 25
(x) for clause (i), the following clause shall be substituted, namely:—
"(i) investment of assets and further provisions regarding investments by
an insurer and investment by insurers in certain cases under sections 27, 27A,
27B, 27C and time, manner and other conditions of investment of assets under
section 27D;"; 30
(xi) for clauses (ia), (ib), (ic), (id) and (ie), the following clauses shall be substituted,
namely:—
"(ia) the form in which a return giving details of investments made, time
and manner including its authentication under section 28;
(ib) the loans including the loans sanctioned to the full-time employees of 35
the insurer under clause (a) of sub-section (3) of section 29;
(ic) the sum to be paid by the insurer to any person under section 31B;
(id) the obligation of insurer in respect of rural or social or unorganised
sector and backward classes under section 32B and 32C;
(ie) the minimum percentage of insurance business in third party risks of 40
motor vehicles under section 32D;";
(xii) for clause (j), the following clause shall be substituted, namely:—
"(j) the minimum information to be maintained by insurers or intermediary
or insurance intermediary, as the case may be, in their books, the manner in
39
which such information shall be maintained, the checks and other verifications
in that connection and all other matters incidental thereto under sub-section (7)
of section 33;";
(xiii) after clause (j), the following clauses shall be inserted, namely:—
5 "(ja) the form in which balance-sheets in respect of the insurance business
of each of the insurers concerned and the manner in which actuarial reports and
abstracts in respect of the life insurance business are to be prepared under
clauses (b) and (c) of sub-section (3) of section 35;
(jb) the manner of assessment of compensation under the proviso to
10 sub-section (4A) of section 37A;
(jc) the fee to be charged by the insurer under sub-section (3) of
section 39;
(jd) the manner and amount of remuneration or reward to be paid or received
by way of commission or otherwise to an insurance agent or an intermediary or
15 insurance intermediary under section 40;
(je) the manner and form of expenses of management under sections 40B
and 40C;";
(xiv) clauses (k) and (l) shall be omitted;
(xv) for clause (m), the following clause shall be substituted, namely:—
20 "(m) the requisite qualifications or practical training or examination to be
passed for appointment as an insurance agent under clause (e) of sub-section (3)
of section 42;”;
(xvi) clause (n) shall be omitted;
(xvii) for clause (o), the following clause shall be substituted, namely:—
25 "(o) the code of conduct under clause (h) of sub-section (3) of
section 42;";
(xviii) clause (p) shall be omitted;
(xix) clause (va) shall be omitted;
(xx) in clause (vb), the words, brackets and figure "sub-section (2) of" shall be
30 omitted;
(xxi) clause (w) shall be omitted;
(xxii) for clause (x), the following clauses shall be substituted, namely:—
"(x) academic qualifications and code of conduct for surveyors and loss
assessors under sub-sections (1) and (2) of section 64UM;
35 (xa) the period for which a person may act as a surveyor or loss assessor
under sub-section (3) of section 64UM;";
(xxiii) for clause (y), the following clause shall be substituted, namely:—
"(y) the manner of exclusion of certain assets under sub-section (1), the
manner of valuation of liabilities under sub-section (2) and time for furnishing
40 statement under sub-section (3) of section 64V;";
(xxiv) for clause (za), the following clause shall be substituted, namely:—
"(za) the matters specified under sub-section (1) of section 64VA relating
to sufficiency of assets;";
(xxv) after clause (zaa), the following clauses shall be inserted, namely:—
40
"(zab) the form, time, manner including authentication of the return giving
details of solvency margin under sub-section (9) of section 64VA;
(zac) the manner of opening and closing places of business under section
64VC;";
(xxvi) after clause (zb), the following clause shall be inserted, namely:— 5
"(zba) the norms for surrender value of life insurance policy under
sub-section (1) of section 113;".
Omission of 102. In the Insurance Act, the Fifth Schedule, the Sixth Schedule and the Eighth
Fifth, Sixth Schedule shall be omitted.
and Eighth
Schedules. CHAPTER III 10
AMENDMENTS TO THE GENERAL INSURANCE BUSINESS (NATIONALISATON) ACT, 1972

Insertion of a 103. In the General Insurance Business (Nationalisation) Act, 1972, after section 10A, 57 of 1972.
new section the following section shall be inserted, namely:—
10B
Enhancement "10B. The General Insurance Corporation and the insurance companies specified
of equity in section 10A may, raise their capital for increasing their business in rural and social 15
capital of
General
sectors, to meet solvency margin and such other purposes, as the Central Government
Insurance may empower in this behalf:
companies.
Provided that the shareholding of the Central Government shall not be less than
fifty one per cent. at any time.".
Omission of 104. Section 25 of the General Insurance Business (Nationalisation) Act, 1972 shall be 20 57 of 1972.
section 25.
omitted.
CHAPTER IV
AMENDMENTS TO THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY Act, 1999
Amendment 105. In section 2 of the Insurance Regulatory and Development Authority Act, 1999, in 41 of 1999.
of section 2. sub-section (1),— 25
(i) in clause (b), after the words "Development Authority", the words" of India",
shall be inserted;
(ii) for clause (f), the following clause shall be substituted, namely:—
‘(f) "Intermediary" or "insurance intermediary" includes insurance brokers,
re-insurance brokers, insurance consultants, corporate agents, third party 30
administrator, surveyors and loss assessors and such other entities, as may be
notified by the Authority from time to time.’.
Amendment 106. In section 3 of the Insurance Regulatory and Development Authority Act, 1999, in 41 of 1999.
of section 3. sub-section (1), after the words ''Development Authority'' the words ''of India'' shall be
inserted. 35
Amendment 107. In section 16 of Insurance Regulatory and Development Authority Act, 1999, in 41 of 1999.
of section 16. sub-section (1), clause (c) shall be omitted.
Repeal and 108. (1) The Insurance Laws (Amendment) Ordinance, 2014, is hereby repealed.
Savings.
(2) Notwithstanding such repeal, anything done or any action taken under the Insurance
Act, 1938, the General Insurance Business (Nationalisation) Act, 1972 and the Insurance 4 0 4 of 1938.
Regulatory and Development Authority Act, 1999 as amended by the said Ordinance, shall 57 of 1972.
be deemed to have been done or taken under the corresponding provisions of the said Acts, 41 of 1999.
as amended by this Act.
STATEMENT OF OBJECTS AND REASONS
The Insurance Act, 1938 (Insurance Act) provides for and regulates the insurance
business in the country. However, with the enactment of the Insurance Regulatory and
Development Authority Act, 1999 (the IRDA Act), the insurance business was opened up to
the private sector. As a result of opening up of the insurance business, the number of
insurance companies has increased from six nationalised companies in 1999 to fifty-three
insurance companies as on today. The IRDA Act paved the way for establishment of the
Insurance Regulatory and Development Authority (IRDA) to protect the interest of holders
of insurance policies and to regulate, promote and ensure orderly growth of the insurance
industry and for matters connected therewith or incidental thereto. The General Insurance
Business (Nationalisation) Act, 1972 (GIBNA Act) nationalised the general insurance business
in India and provided for the acquisition and transfer of shares of Indian general insurance
companies, in order to serve better the need of the economy, by securing the development of
general insurance business in the best interest of the public.
2. At the instance of the Insurance Regulatory and Development Authority (IRDA),
the Law Commission of India (the Commission) had examined the Insurance Act, 1938 and
the IRDA Act and submitted its 190th Report to the Government on the 1st June, 2004. The
recommendations of the Commission covered legal issues concerning repudiation of life
insurance policies; nomination, assignment and transfer of policies; merger of the IRDA Act
with the Insurance Act, 1938; setting up of a grievance redressal mechanism, deletion of
redundant provisions of the Insurance Act, 1938, etc. IRDA constituted a Committee of
Experts under Sh. K.P. Narasimhan, ex-Chairman, LIC (the KPN Committee) on the 7th March,
2005 to examine the recommendations made by the Commission. The Committee submitted
its report to IRDA on the 26th July, 2005.
3. IRDA offered its comments on the recommendations of the Commission and the
KPN Committee, and proposed some amendments to the Life Insurance Corporation Act,
1956, GIBNA Act, the Insurance Act, 1938 and the IRDA Act. After examining the
recommendations of the Law Commission, KPN Committee and IRDA, the Insurance Laws
(Amendment) Bill, 2006 was prepared. It incorporated amendments to the Insurance Act,
1938, the Life Insurance Corporation Act, 1956, the GIBNA Act and the IRDA Act. The
proposed Insurance Laws (Amendment) Bill, 2006 was referred to a Group of Ministers
(GOM).
4. Accordingly, the GOM examined the proposed amendments and decided that the
amendment to the Life Insurance Corporation Act, 1956 may be carried out separately and
not with amendments to the other insurance related Acts. Accordingly, the Insurance Laws
(Amendment) Bill, 2008 with a view to amend the Insurance Act, 1938, the GIBNA Act and
the IRDA Act, through a total of 111 clauses, was prepared. The Insurance Laws (Amendment)
Bill, 2008 was introduced in Rajya Sabha on the 22nd December, 2008. On introduction in the
Rajya Sabha in December 2008, the Bill was referred to the Standing Committee on Finance
for examination and report. The Standing Committee submitted its report to Parliament on the
13th December, 2011. After examination and processing of the Standing Committee report,
the Government on the 14th November, 2012, and on other occasions thereafter, gave notice
to introduce 88 official amendments to the Insurance Laws (Amendment) Bill, 2008. The Bill,
however, could not be taken up for consideration and passing.
5. Subsequently in August, 2014 the Government proposed 11 additional official
amendments to the Insurance Laws (Amendment) Bill, 2008, in addition to the earlier 88. The
Bill could, however, not be taken up by the House and was referred to a Select Committee of
the Rajya Sabha under the Chairmanship of Dr. Chandan Mitra on 14th August, 2014.
41
42
6. The Select Committee, in its report presented to Parliament on 10th December, 2014,
made various recommendations suggesting certain amendments in the 2008 Bill. Based on its
recommendations, the Select Committee incorporated amendments to the Insurance Laws
(Amendment) Bill, 2008 along with the 99 official amendments proposed by Government
earlier, and reported a revised Bill, termed as the Insurance Laws (Amendment) Bill, 2014,
with its report.
7. The Cabinet in its meeting held on the 10th December, 2014 approved the proposal
to enable the Bill as reported by the Select Committee to be taken up for consideration and
passing. Accordingly, the Finance Minister gave notice of a motion in the Rajya Sabha that
the Bill as reported by the Select Committee be taken into consideration and be passed.
However, the Bill could not be taken up for consideration in the Rajya Sabha during the
winter session 2014.
8. In view of the urgency of the matter and given the circumstances that existed,
which rendered it necessary to give immediate effect to the proposed amendments in the
Insurance laws by way of promulgation of an Ordinance, the Cabinet approved on the 24th
December, 2014 the promulgation of the Insurance Laws (Amendment) Ordinance, 2014 to
amend the Insurance Act, 1938, the GIBNA Act and the IRDA Act in accordance with the
Insurance Laws (Amendment) Bill, 2008 as reported by the Select Committee of the
Rajya Sabha, and for suitably introducing a Bill in Parliament to replace the Ordinance in the
next session for consideration and passing. The Ordinance came into force with effect from
the 26th December, 2014 after the Presidential assent.
9. Accordingly, to replace the above Ordinance, the Insurance Laws (Amendment)
Bill, 2015 is being introduced in Parliament. The Insurance Laws (Amendment) Bill, 2015
proposes to amend the Insurance Act, 1938, the Insurance Regulatory and Development
Authority Act, 1999 and the General Insurance Business (Nationalisation) Act, 1972. The
said Bill, inter alia, seeks to—
(i) define "health insurance business" and retain capital requirements for health
insurers at the level of Rs. 100 crore to discourage non-serious players;
(ii) raise foreign equity investment cap in insurance sector from 26 per cent. to
49 per cent. with appropriate safeguards of mandating Indian ownership and control.
It also defines the term "control" in the Insurance Act itself by adding the following
explanation after the proposed text of clause (7A) of section 2 of the Insurance
Act, 1938:
‘Explanation—The term "control" shall include the right to appoint a majority
of the directors or to control the management or policy decisions including by virtue of
their shareholding or management rights or shareholders agreements or voting
agreements.’;
(iii) redefine "re-insurance" as the insurance of part of one insurer's risk by
another insurer who accepts the risk for a mutually acceptable premium", and thereby
exclude the possibility of 100 per cent. ceding of risk to a re-insurer;
(iv) permit foreign re-insurers to open branches only for re-insurance business
in India;
(v) facilitate entry of Lloyd's of London in insurance business in India in joint
venture with Indian partners and also as branch of foreign re-insurer;
(vi) provide for permanent registration of the insurers with annual renewal fee
and right to cancel the registration on breach of conditions specified by the IRDA;
(vii) provide for maintenance of a register of claims and policies by Insurers in
any form, including electronic;
43
(viii) specify fine on intermediaries and insurance companies for misconduct of

intermediaries and to make appropriate provision in the legislation to effectively deter
multilevel marketing of insurance products in the interest of policyholders and to
curtail the practice of mis-selling;
(ix) enable agents to work across companies in various business categories;
(x) enable inclusion of representatives of self-help groups and insurance
cooperative societies in insurance councils;
(xi) broaden scope of proposed section 64UM of the Insurance Act to more
broadly empower the Authority to regulate the functions, code of conduct, etc., of
surveyors and loss assessors;
(xii) allow flexibility to IRDA to define new insurance intermediaries in a dynamic
world, as the industry progresses;
(xiii) remove restriction on divestment by Indian promoters of insurance
companies, which were required earlier to divest to 26 per cent. or such other, prescribed
percentage in the manner and period prescribed by the Central Government;
(xiv) remove requirement of deposits by insurers for registration in view of these
being regulated by the IRDA on the basis of solvency margin;
(xv) provide for obligatory underwriting of third party risks of motor vehicles on
the pattern of insurance in rural areas and social sectors with exemption to various
standalone / mono-line insurers such as those operating in areas like health, re-insurance,
agriculture, export credit guarantee;
(xvi) make provision for absolute and conditional assignments of life insurance
policies;
(xvii) entrust responsibility of appointing insurance agents to insurers with
IRDA to regulate their eligibility, qualifications and other aspects;
(xviii) make life insurance policy unchallengeable on whatsoever ground after
three years of issue of the policy and limiting the grounds for challenge during the
period within three years;
(xix) delete provisions relating to Tariff Advisory Committee (TAC) in view of
the detariffing of rates and premiums with effect from the 1st January, 2007;
(xx) provide for making Life Insurance Council and General Insurance Council as
self-regulating bodies by empowering them to frame bye-laws for elections, meetings,
levy and collection of fees from its members;
(xxi) provide for powers of adjudication to the Authority and appeal to Securities
Appellate Tribunal against the decisions of the Authority;
(xxii) bar courts from taking cognizance of any offence punishable under the
Insurance Act, save on a complaint made by an officer of IRDA;
(xxiii) delete redundant provisions and make consequential amendments to
various provisions in the Insurance Act;
(xxiv) allow insurance companies to raise capital through newer instruments on
the pattern of banks;
(xxv) enable formulation of regulations by IRDA for payment of commission and
control of management expenses provided that IRDA shall take into account the interests
of the agents and other intermediaries concerned;
(xxvi) enable formulation of regulations for opening and closing of foreign
branches and the closing of domestic branches of Indian insurers and norms for
opening domestic branches;
44
(xxvii) address matters relating to the functions, code of conduct, etc., of

surveyors and loss assessors through regulations;
(xxviii) allow the Public Sector General Insurance Companies and General
Insurance Corporation (GIC) to raise capital from the market to meet future capital
requirements, provided that the Government's shareholding would not be allowed to
come below 51 per cent. at any point of time; and
(xxix) include "corporate agent" and "third party administrator'' in the definition
of "insurance intermediaries" in the IRDA Act.
10.The proposed amendments are aimed at bringing about improvements and revision
in the laws relating to insurance business in India to remove archaic provisions and incorporate
modern day practices emerging in a changing dynamic environment, which includes private
participation. The amendments also incorporate provisions to provide IRDA with the flexibility
to discharge its functions more effectively and efficiently.
11.The Bill seeks to replace the aforesaid Ordinance.
ARUN JAITLEY.
NEW DELHI;
The 14th February, 2015.
Notes on clauses
Clause 2.—This clause seeks to substitute the words "Indian Companies Act, 1913"
and "the Companies Act, 1956" throughout the Insurance Act, 1938 with the words "the
Companies Act, 2013".
Clause 3.—This clause seeks to amend section 2 of the Act so as to amend the
definitions of actuary, Authority, Indian insurance company, insurance co-operative society,
insurer and to insert the new definitions of health insurance business, re-insurance and the
Securities Appellate Tribunal in the said section.
Clause 4.—This clause seeks to insert a new section 2CB in the Act to prohibit insurance
of the properties in India, ship, vessel, aircraft registered in India from foreign insurer India
save with the prior permission of the Authority. It also proposed a penalty of five crore of
rupees for contravention of this provision.
Clause 5.—This clause seeks to omit section 2E of the Act relating to insurers, who
enter into new contracts before commencement of the Act, as it has become redundant.
Clause 6.—This clause seeks to amend section 3 of the Act to regulate the manner of
making application for registration of insurers by regulation and provide for appeal to Securities
Appellate Tribunal against the refusal of registration by the Authority and suspension or
cancellation of registration in certain cases.
Clause 7.—This clause seeks to substitute section 3A of the Act to provide for annual
fee in place of annual renewal of registration of insurers by regulations.
Clause 8.—This clause seeks to substitute section 4 of the Act to provide for
minimum limit for annuities and other benefits secured by policies of life insurance by
regulations.
Clause 9.—This clause seeks to amend section 5 of the Act to omit the redundant
provisions.
Clause 10.—This clause seeks to substitute section 6 of the Act to provide for capital
of rupees one hundred crore for exclusive health insurance business and minimum net
owned funds of rupees five thousand crore for a foreign re-insurer opening branch in India.
Clause 11.—This clause seeks to amend section 6A of the Act to regulate the
capital structure, voting rights, maintenance of records of the shareholders, etc., of life,
general, health insurance and re-insurance companies and to omit certain redundant
provisions.
Clause 12.—This clause seeks to omit section 6AA of the Act relating to manner of
divesting of the excess shareholding by promoters in certain cases.
Clause 13.—This clause seeks to amend section 6B of the Act to include general,
health insurance business and re-insurance for compliance of capital structure, empower the
Authority to regulate the same in place of the Central Government and empower the Securities
Appellate Tribunal to hear appeals in place of the High Court.
Clause 14.—This clause seeks to omit sections 6C, 7, 8 and 9 of the Act relating to
capital structure, company limited by guarantee and deposits by the insurers before
registration.
45
46
Clause 15.—This clause seeks to amend section 10 of the Act to empower the Authority
to regulate the separation of accounts and funds of insurers.
Clause 16.—This clause seeks to substitute section 11 of the Act to empower the
Authority to regulate preparation of annual accounts and balancesheet by insurers.
Clause 17.—This clause seeks to substitute section 12 of the Act to provide for audit
of insurance business.
Clause 18—This clause seeks to amend section 13 of the Act to omit the redundant
provisions relating to actuarial investigation and empower the Authority to regulate the
insurance business through actuaries.
maintenance of records of policies and claims in any form, including electronic mode and
issuance of policies above a specified threshold in terms of sum assured and premium in
electronic form.
Clause 20.—This clause seeks to substitute section 15 of the Act to omit certain
redundant provisions relating to submission of returns by insurers.
Clause 21.—This clause seeks to omit section 16 of the Act relating to returns by
insurers established outside India.
Clause 22.—This clause seeks to omit sections 17 and 17A of the Act relating to
exemption from certain provisions of the Indian Companies Act, 1913 and furnishing of
balance sheet and accounts to Registrar of Companies and non-application of the Act to the
preparation of accounts for the period prior to 1968.
to regulate filing of copy of the returns of the insurers and allowing their inspection for a fee
as specified by Regulations.
Clause 24.—This clause seeks to amend section 21 of the Act to provide for appeal to
the Securities Appellate Tribunal by insurers against the final order of the Authority not
accepting a return or other statement submitted to it.
Clause 25.—This clause seeks to amend section 22 of the Act to make consequential
amendments relating to powers of the Authority.
Clause 26.—This clause seeks to substitute sections 27, 27A, 27B, 27C and 27D of the
Act to provide for broad guidelines for investment by insurers and prohibit investment of
funds outside India. The objective is to make the investment provisions more effective.
Clause 27.—This clause seeks to substitute sections 28, 28A and 28B to empower the
Authority to regulate statements, returns of investment of assets of insurers.
granting of loans or advances to subsidiaries of insurance companies with the prior approval
of the Authority.
liability of directors, managers or officers for loss sustained by insurer or policyholders due
to contravention of the provisions relating to investments.
Clause 30.—This clause seeks to amend section 31 of the Act to provide that none of
the assets in India of any insurer shall be kept otherwise than in the name of a public officer
approved by the Authority.
47
Clause 31.—This clause seeks to amend section 31A of the Act to omit redundant
provisions relating to management of the insurance companies.
Clause 32.—This clause seeks to substitute section 31B of the Act to empower the
Authority to regulate the payment of excessive remuneration.
Clause 33.—This clause seeks to omit section 32 of the Act relating to employment of
managing agents.
Clause 34.—This clause seeks to amend section 32A of the Act to prohibit the common
officer for insurers and prescribe a full-time officer.
Clause 35.—This clause seeks to amend section 32B of the Act to provide for insurance
business in rural and social sector in place of rural or social sector.
Clause 36.—This clause seeks to insert a new section 32D in the Act for obligation on
all insurers in respect of third party risks of motor vehicles except any insurer who is primarily
engaged in the business of health, re-insurance, agriculture, export credit guarantee.
Clause 37.—This clause seeks to substitute section 33 of the Act to provide
for coverage of intermediary or insurance intermediary for investigation and inspection by
the Authority and allows any insurer or intermediary or insurance intermediary aggrieved by
any order made under this section to prefer an appeal to the Securities Appellate Tribunal.
Clause 38.—This clause seeks to amend section 34B to enhance the penalty of one
lakh rupees for each day during which such contravention continues or one crore rupees,
whichever is less, for contravention of the orders of the Authority for removal of managerial
persons from office.
Clause 39.—This clause seeks to amend section 34C of the Act to provide for
consultation with the Central Government for appointment of Additional Directors of the
insurers by the Authority in public interest.
Clause 40.—This clause seeks to omit section 34G of the Act relating to the power of
the Authority to order closure of foreign branches of Indian insurance companies.
Clause 41.—This clause seeks to amend section 34H of the Act to designate Deputy
Director or an equivalent officer of the Authority as authority for search and seizure ordered
by the Authority and substitute the Securities Appellate Tribunal in place of the
Central Government.
to regulate amalgamation and transfer of insurance business.
Clause 43.—This clause seeks to substitute section 36 of the Act relating to the
sanction of amalgamation and transfer of insurance business by the Authority by omitting
redundant provisions.
Clause 44.—This clause seeks to amend section 37A of the Act to provide for thescheme
for amalgamation to be notified in the Official Gazette after approval of the Central Government.
This clause allows the policyholder or shareholder or member of each of the insurers to file
an appeal before the Securities Appellate Tribunal against the recommendation of the Authority
for amalgamation.
Clause 45.—This clause seeks to substitute sections 38, 39 and 40 of the Act dealing
with assignment and transfer of insurance policies to make a clear distinction between
absolute and conditional assignments of life policies. It also empowers the Authority to
regulate payment of commission for procuring business by taking into consideration the
48
nature and tenure of the policy and in particular the interest of the agents and other
intermediaries concerned.
Clause 46.—This clause seeks to omit section 40A of the Act to omit the redundant
provisions relating to limitation of expenditure on commission.
Clause 47.—This clause seeks to substitute sections 40B and 40C of the Act to regulate
management expenses of life, general and health insurers and re-insurers.
Clause 48.—This clause seeks to amend section 41 of the Act by enhancing the
penalty from five hundred rupees up to ten lakh rupees in case an insurer contravenes the
provision relating to prohibition of rebates.
Clause 49.—This clause seeks to substitute section 42 of the Act to regulate the
appointment of insurance agents by insurers in respect of eligibility, disqualification and
other aspects and to make the insurer responsible for all the acts and omissions of its agents
including violation of code of conduct specified under clause (h) of sub-section (3) and
liable to a penalty which may extend to one crore rupees.
Clause 50.—This clause seeks to substitute sections 42A, 42B and 42C of the Act with
new section 42A which prohibits insurance business through principal agent, special agent
and multilevel marketing.
Clause 51.—This clause seeks to amend section 42D of the Act to provide for
registration in place of licensing of intermediary or insurance intermediary by the Authority
and imposition of penalty up to one crore rupees on any person acting as an intermediary or
an insurance intermediary without registration.
Clause 52.—This clause seeks to substitute section 42E of the Act to regulater
equirement of capital, form of business and other conditions for intermediary or insurance
intermediary.
Clause 53.—This clause seeks to substitute section 43 of the Act to enable the
insurersto keep the records of insurance agents as long as the insurance agent is in service
and for a period of five years after the cessation of appointment.
Clause 54.—This clause seeks to omit section 44 of the Act relating to shifting of
agents from one insurer to another insurer.
Clause 55.—This clause seeks to substitute sections 44A and 45 of the Act to provide
that no policy of life insurance shall be called in question on any ground after the period of
three years. It also provides that the policy can be called in question by the insurer within the
period of three years only in case of fraud.
Clause 56.—This clause seeks to omit sections 47A and 48 of the Act relating to claims
on small life insurance policies and directors of insurers being companies.
Clause 57.—This clause seeks to substitute section 48A of the Act to prohibit
insurance agents or insurance intermediaries from becoming director in any insurance
company.
Clause 58.—This clause seeks to amend section 49 of the Act relating to restriction of
dividends and bonuses in order to omit certain redundant provisions.
Clause 59.—This clause seeks to substitute sections 52 and 52A of the Act in orderto
omit redundant provisions in the section relating to prohibition of the business on dividing
principle. It further provides for appointment of an Administrator by the Authority to manage
the affairs of the insurer.
49
Clause 60.—This clause seeks to amend section 52BB of the Act to provide for appeal
to the Securities Appellate Tribunal in place of the Central Government against the order of
attachment of property by the Authority.
Clause 61.—This clause seeks to substitute section 52D of the Act to provide for
termination of appointment of an Administrator by the Authority in place of the Central
Government.
Clause 62.—This clause seeks to amend section 52E of the Act to provide for final
decision on appointment of an Administrator by the Authority in place of the Central
Government.
Clause 63.—This clause seeks to amend section 52F of the Act to provide the penalty
of ten thousand rupees for each day of withholding the documents of property from the
Administrator appointed by the Authority during which such failure continues or ten lakh
rupees, whichever is less.
Clause 64.—This clause seeks to amend section 52G of the Act to omit the words
"Central Government" as a consequential change.
Clause 65.—This clause seeks to omit sections 52H to 52N (both inclusive) of theAct
relating to acquisition of the undertakings of the insurers in certain cases by the Central
Government, being redundant.
Clause 66.—This clause seeks to amend section 53 of the Act to provide for insertion
of explanation defining Tribunal under the Companies Act, 2013.
Clause 67.—This clause seeks to make consequential amendments in section 58 of the
Act to substitute relevant sections of the Companies Act, 2013 in place of Indian Companies
Act, 1913.
Clause 68.—This clause seeks to omit section 59 of the Act relating to return of
deposits as such deposits by insurers before registration are proposed to be discontinued.
Clause 69.—This clause seeks to amend the heading in Part II A of the Act.
Clause 70.—This clause seeks to omit sections 64A and 64B of the Act relating to
incorporation of the Insurance Association of India and entry of names of the members in the
register.
Clause 71.—This clause seeks to substitute sections 64C and 64D of the Act to
provide for consequential amendment to the section dealing with the Life Insurance Council
and General Insurance Council.
Clause 72.—This clause seeks to substitute section 64F of the Act relating to
composition, function and operational issues of the Life Insurance Council and the General
Insurance Council to make them the self-regulatory organisations.
Clause 73.—This clause seeks to amend section 64G of the Act to empower the Executive
Committees of Life Insurance Council and General Insurance Council to nominate members
on casual vacancies in such manner as may be laid down in the bye-laws of the Council
concerned.
Clause 74.—This clause seeks to omit section 64-I of the Act relating to holding of
examination for insurance agents by the Life Insurance Council.
Clause 75.—This clause seeks to amend section 64J of the Act to enable the Life
Insurance Council to collect such fees as may be laid down in the bye-laws of the Council
from the insurers carrying on life insurance business.
50
Clause 76.—This clause seeks to amend section 64L of the Act to enable the General
Insurance Council to collect such fees as may be laid down in the bye-laws of the Council
from the insurers carrying on general insurance business.
Clause 77.—This clause seeks to amend section 64N of the Act to empower the
Authority to specify the manner for holding of joint meeting of the Executive Committees of
the Life and General Insurance Councils.
Clause 78.—This clause seeks to amend section 64R of the Act to empower the Life
Insurance Council and the General Insurance Council to make bye-laws for elections, meetings,
levy and collection of fees, etc.
Clause 79.—This clause seeks to omit sections 64S and 64T of the Act relating to
transitory provisions.
Clause 80.—This clause seeks to omit sections 64U to 64UL (both inclusive) of the
Act relating to Tariff Advisory Committee and control of rates in view of the de-tariffing with
effect from 01-01-2007.
Clause 81.—This clause seeks to insert a new section 64ULA in the Act to provide
transitory provisions for continuation of rates, terms and conditions fixed by the Tariff
Advisory Committee.
Clause 82.—This clause seeks to substitute section 64UM of the Act to empower the
Authority to regulate the functions, code of conduct, etc., of surveyors and loss assessors.
Clause 83.—This clause seeks to substitute sections 64V and 64VA of the Act to
empower the Authority to regulate valuation of the assets and procedure for calculation of
solvency margin of insurers.
Clause 84.—This clause seeks to substitute section 64VC of the Act to empower the
Authority to regulate opening and closing of places of business of insurers.
Clause 85.—This clause seeks to omit Part III and Part IIIA of the Act relating to
provident societies, which are no longer permitted to underwrite the insurance business. It
also omits the provisions relating to insurance co-operative societies.
Clause 86.—This clause seeks to omit Part IV of the Act relating to mutual insurance
companies and life insurance societies, as they are not allowed to underwrite insurance
business in India.
Clause 87.—This clause seeks to amend section 102 of the Act to enhance the penalty
for default in complying with, or act in contravention of, the Act to one lakh rupees for each
day during which such failure continues or one crore rupees, whichever is less.
Clause 88.—This clause seeks to substitute sections 103 and 104 of the Act to enhance
the fine not exceeding twenty-five crore rupees and with imprisonment which may extend to
ten years in case a person carries on business of insurance without obtaining a certificate of
registration. It also enhances the maximum limit of penalty for contravention of provisions
relating to investment of controlled fund or assets to twenty-five crore rupees.
Clause 89.—This clause seeks to amend section 105 of the Act to enhance the penalty
not exceeding one crore rupees in case any executive of the insurer wrongfully obtains or
withholds the property under the Act.
Clause 90.—This clause seeks to substitute sections 105B and 105C of the Act to
enhance penalty in case an insurer fails to comply with the obligations for rural or social
sector or third party insurance for motor vehicles to not exceeding twenty-five crore rupees.
51
It further provides for powers of adjudication to the Authority and provides penalty for
contravention where there is no separate penalty provided in the Act.
Clause 91.—This clause seeks to amend section 106A of the Act which is consequential
in nature.
Clause 92.—This clause seeks to omit sections 107 and 107A of the Act being redundant.
Clause 93.—This clause seeks to substitute section 109 of the Act to provide that no
court shall take cognizance of any offence punishable under the Act save on a complaint
made by an officer of the Authority or by any person authorised by it.
appeal to the Securities and Appellate Tribunal against the decision of the Authority and
omit certain redundant provisions.
Clause 95.—This clause seeks to omit section 110E of the Act being redundant.
Clause 96.—This clause seeks to omit sections 110G and 110H of the Act relating to
appeals in view of the provision for appeal to the Securities Appellate Tribunal.
Clause 97.—This clause seeks to insert a new section 110HA in the Act to provide
forrecovery of penalties imposed by the Authority as arrears of land revenue.
Clause 98.—This clause seeks to amend section 111 of the Act to omit the words
"provident society".
Clause 99.—This clause seeks to substitute section 113 of the Act to omit redundant
provisions relating to acquisition of surrender value of life insurance policies.
Clause 100.—This clause seeks to amend section 114 of the Act to omit and insert the
provisions relating to rule making powers in respect of which substantive provisions have
been made in the Act.
Clause 101.—This clause seeks to amend section 114A of the Act to omit and insert
the provisions relating to regulation making powers in respect of which substantive provisions
have been made in the Act.
Clause 102.—This clause seeks to omit the Fifth Schedule, Sixth Schedule and Eighth
Schedule from the Act being redundant.
Clause 103.—This clause seeks to amend the General Insurance Business
(Nationalisation) Act, 1972 to insert section 10B to empower the Central Government to allow
public sector General Insurance companies to raise money from the market to meet their
capital requirements.
Clause 104.—This clause seeks to omit section 25 from the General Insurance Business
(Nationalisation) Act, 1972 relating to properties in India not to be insured with foreign
insurers except with permission of Central Government as the said provision has been kept
in the Insurance Act, 1938.
Clause 105.—This clause seeks to amend section 2 of the Insurance Regulatory and
Development Authority Act, 1999 in order to substitute "Insurance Regulatory and
Development Authority" with "Insurance Regulatory and Development Authority of India"
and include corporate agents and third party administrators in the definition of intermediaries.
Clause 106.—This clause seeks to amend section 3 of the Insurance Regulatory and
Development Authority Act, 1999 consequent upon the change of the name of the Insurance
Regulatory and Development Authority to Insurance Regulatory and Development Authority
of India.
52
Clause 107.—This clause seeks to omit clause (c) of sub-section (1) of section 16 of
the Insurance Regulatory and Development Authority Act, 1999 relating to imposition of
levy on insurers by the Authority as a percentage of premium income of the insurers for
Insurance Regulatory and Development Authority Fund.
Clause 108.—This clause seeks to repeal the Insurance Laws (Amendment) Ordinance,
2014 and to save the amendments made to the Insurance Act, 1938, the General Insurance
Business (Nationalisation) Act, 1972 and the Insurance Regulatory and Development
Authority Act, 1999 by the Insurance Laws (Amendment) Act, 2015.
MEMORANDUM REGARDING DELEGATED LEGISLATION
Clause 100 of the Bill seeks to amend section 114 of the Insurance Act, 1938 which
empowers the Central Government to make rules. The matters on which rules may be made,
inter alia, relate to-(i) the manner of inquiry under sub-section (1) of section 105C; (ii) the
form in which an appeal may be preferred under sub-section (2) and the fee payable in
respect of such appeal; (iii) the procedure for filing and disposing of an appeal under sub-
section (6) of section 110.
Clause 101 of the Bill seeks to amend section 114A of the Insurance Act, 1938 which
empowers the Insurance Regulatory and Development Authority to make regulations
consistent with the Act and the rules made thereunder, to carry out the purposes of the Act.
The matters on which regulations may be made, inter alia, relate to (i) manner of making
application for registration and documents under sub-section (2) of section 3; (ii) annual fee
to the Authority and manner of payment under sub-section (1) of section 3A; (iii) the
manner in which an abstract of the report of the actuary to be specified; (iv) the fee for
procuring a copy of return under sub-section (1) of section 20; (v) the form in which a return
giving details of investments made under section 28; (vi) the loans including the loans
sanctioned to the full time employees of the insurer under clause (a) of sub-section (3) of
section 29; (vii) the sum to be paid by the insurer to any person under section 31B; (viii) the
obligation of insurer in respect of rural or social or unorganised sector and backward classes
under sections 32B and 32C; (ix) the minimum percentage of insurance business in third
party risks of motor vehicles under section 32D; (x) the form in which balance sheets in
respect of the insurance business of each of the insurers concerned and the manner in which
actuarial reports and abstracts in respect of the life insurance business are to be prepared
under clauses (b) and (c) of sub-section (3) of section 35; (xi) the manner of assessment of
compensation under the proviso to sub-section (4A) of section 37A; (xii) the fee to be
charged by the insurer under sub-section (3) of section 39; (xiii) the manner of payment of
benefits under sub-section (12) of section 39; (xiv) the manner and amount of remuneration
or reward to be paid or received by way of commission or otherwise to an insurance agent or
an intermediary or insurance intermediary under section 40; (xv) the manner and form of
expenses of management under section 40C; (xvi) the requisite qualifications or practical
training or examination to be passed for appointment as an insurance agent under clause (e)
of sub-section (3) of section 42; (xvii) the code of conduct under clause (h) of sub-section
(3) of section 42; (xviii) the manner of exclusion of certain assets, the manner of valuation of
liabilities and time for furnishing statement under section 64V; (xix) the manner of opening
and closing places of business under section 64VC; (xx) the norms for surrender value of life
insurance policy under sub-section (1) of section 113.
2. The rules made under section 114 and the regulations made under section 114A of
the Insurance Act, 1938, shall have to be laid, as soon as they are made, before both Houses
of Parliament.
3. The matters in respect of which rules and regulations may be made are matters of
procedure or administrative detail and it is not practicable to provide for them in the Bill itself.
The delegation of legislative power is, therefore, of a normal character.
53
ANNEXURE
EXTRACTS FROM THE INSURANCE ACT, 1938
(4 OF 1938)
* * * * *
Definitions. 2. In this Act, unless there is anything, repugnant in the subject or context,—
(1) "actuary" means an actuary possessing such qualifications as may be
specified by the regulations made by the Authority;
* * * * *
(IA) "Authority" means the Insurance Regulatory and Development Authority
established under sub-section (1) of section 3 of the Insurance Regulatory and
Development Authority Act, 1999; 41 of 1999.
* * * * *
(5A) "chief agent" means a person who, not being a salaried employees of an
insurer, in consideration of any commission—
(i) performs any administrative and organising functions for the insurer,
and
(ii) procures life insurance business for the insurer by employing or causing
to be employed insurance agents on behalf of the insurer;
* * * * *
(7A) "Indian insurance company" means any insurer being a company—
(a) which is formed and registered under the Companies Act, 1956; 1 of 1956.
(b) in which the aggregate holdings of equity shares by a foreign company,

either by itself or through its subsidiary companies or its nominees, do not
exceed twenty-six per cent. paid-up equity capital of such Indian insurance
company;
(c) whose sole purpose is to carry on life insurance business or general
insurance business or re-insurance business.
Explanation.—For the purposes of this clause, the expression "foreign
company" shall have the meaning assigned to it under clause (23A) of section 2
of the Income-tax Act, 1961. 43 of 1961.
* * * * *
(8A) "insurance co-operative society" means any insurer being a co-operative
society,—
* * * * *
(b) having a minimum paid-up capital, (excluding the deposits required to
be made under section 7) of rupees one hundred crores;
* * * * *
(d) whose sole purpose is to carry on life insurance business or general
insurance business in India;
(9) "insurer" means—
54
55
(a) any individual or unincorporated body of individuals or body corporate

incorporated under the law of any country other than India, carrying on insurance
business not being a person specified in sub-clause (c) of this clause which—
(i) carries on that business in India, or
(ii) has his or its principal place of business or is domiciled in India,
or
(iii) with the object of obtaining insurance business, employs a
representative, or maintains a place of business, in India;
(b) any body corporate (not being a person specified in sub-clause (c) of
this clause) carrying on the business of insurance, which is body corporate
incorporated under any law for the time being in force in India, or stands to any
such body corporate in the relation of a subsidiary company within the meaning
7 of 1913. of the Indian companies Act, 1913, as defined by sub-section (2) of section 2 of
that Act, and
(c) any person who in India as a standing contract with underwriters who
are members of the Society of Lloyd's whereby such person is authorised within
the terms of such contract to issue protection notes, cover notes, or other
documents granting insurance cover to others on behalf of the underwriters,
but does not include a principal agent, chief agent, special agent, or an insurance
agent or a provident society as defined in Part III;
(10) "insurance agent" means an insurance agent licensed under section 42 who
recieves or agrees to receive payment by way of commission or other remuneration in
consideration of his soliciting or procuring insurance business including business
relating to the continuance, renewal or revival of policies of insurance;
* * * * *
(11) "life insurance business" means the business of effecting contracts of
insurance upon human life, including any contract where by the payment of money is
assured on death (expect death by accident only) or the happening of any contingency
dependent on human life, and any contract which is subject to payment of premiums
for a term dependent on human life and shall be deemed to include—
* * * * *
(c) the granting of superannunation allowances and annuities payable out
of any fund applicable solely to the relief and maintenance of persons engaged
or who have been engaged in any particular profession, trade or employment or
of the dependents of such persons;
(12) "manager" and "officer" have the meanings assigned to those expressions
7 of 1913. in cluases (9) and (11) respectively of section 2 of the Indian Companies Act, 1913;
(13) "managing agent" means a person, firm or company entitled to the
management of the whole affairs of a company by virtue of an agreement with the
company, and under the control and direction of the directors expect to the extent, if
any, otherwise provided for in the agreement, and includes any person, firm or company
occupying such position by whatever name called.
Explanation.—If a person occupying the position of managing agent calls himself
manager or managing director, he shall nevertheless be regarded as managing agent for the
purposes of section 32 of this Act;
* * * * *
56
(15) "principal agent" means who, not being a salaried employee of an insurer, in
consideration of any commission,—
(i) performs any administrative and organising functions for the insurer,
and
(ii) procures general insurance business whether wholly or in part by
employing or causing to be employed insurance agents on behalf of the insurer;
(16) "private company" and "public company" have the meanings respectively
assigned to them in clauses (13) and (13A) of section 2 of the Indian Companies Act,
1913; 7 of 1913.
(17) "special agent' means a person who, not being a salaried employee of an
insurer, in consideration of any commission, procures life insurance business for the
insurer whether wholly or in part by employing or causing to be employed insurance
agents on behalf of the insurer, but does not include a chief agent.
* * * * *
This Act not 2E. The provisions of this Act shall not apply to an insurer as defined in paragraph (i)
to apply to or (iii) of sub-clause (a) of clause (9) of section 2 in relation to any class of his insurance
certain
insurers,
business where such insurer has ceased, before the commencement of this Act, to enter into
ceasing to any new contracts of that class of business.
enter into
new contracts
before
commencement
of Act.
Registration. 3. (1) * * * *
(2) Every application for registration shall be made in such manner as may be determined
by the regulations made be the Authority and shall be accompanied by—
(a) a certified copy of the memorandum and articles of association, where the
applicant is a company and incorporated under the Indian Companies Act, 1913, for 7 of 1913.
under the Indian Companies Act, 1882, or under the Indian Companies Act, 1866 or 6 of 1882.
under any Act repealed thereby, or, in the case of any other insurer specified in sub- 10 of 1866.
clause (a), (ii) or sub-clause (b) , of clause (9) of section 2, a certified copy of the deed
of partnership or of the deed of constitution of the company, as the case may be, or in
the case of an insurer having his principal place of business or domicile outside India,
the document specified in clause (a) of section 63;
(b) the name, address and the occupation, if any, of the directors where the
insurer is a company incorporated under the Indian Companies Act, 1913 or under the 7 of 1913.
Indian Companies Act, 1882 or under the Indian Companies Act, 1886 or under any Act 6 of 1882.
repealed thereby, and in the case of an insurer specified in sub-clause (a) (ii) of clause 10 of 1866.
(9) of section 2 of the names and addresses of the proprietors and of the manager in
India, and in other case the full address of the principal office of the insurer in India,
and the names of the directors and the manager at such office and the name and
address of some one or more persons resident in India authorised to accept any notice
required to be served on the insurer;
(c) a statement of the class or classes of insurance business done or to be done,
and a statement that the amount required to be deposited by section 7 or section 98
before application for registration is made has been deposited together with a certificate
from the Reserve Bank of India showing the amount deposited.
(d) where the provision of section 6 or section 97 apply, a declaration verified by
an affidavit made by the principal officer of the insurer authorised in that behalf that
the provisions of those sections as to paid-up equity capital or working capital have
been complied with;
57
(e) in the case of an insurer having his principal place of business or domicile
outside India, a statement verified by an affidavit made by the principal officer of the
insurer setting forth the requirements (if any) not applicable to nationals of the country
in which such insurer is constituted, incorporated or domiciled which are imposed by
the laws or practice of that country upon Indian nationals as condition of carrying on
insurance business in that country;
(f) a certified copy of the published prospectus, if any, and of the standard policy
forms of the insurer and statements of the assured rates, advantages, terms and
conditions to be offered in connection with insurance policies together with a certificate
in connection with life insurance business by an actuary that such rates, advantages,
terms and conditions are workable and sound:
Provided that in the case of marine accident and miscellaneous insurance business
other than workmen's compensation and motor car insurance the above requirements
regarding prospectus, forms and statements shall be complied with only is so far as the
prospectus, forms and statements may be available;
(g) the receipt showing payment of fee as may be determined by the regulations
which shall not exceed fifty thousands rupees for each class of business as may be
specified by the regulations made by the Authority;
(h) such other documents as may be specified by the regulations made by the
Authority.
* * * * *
2A. If, on receipt of an application for registration and after making such inquiry as he
deems fit, the Authority is satisfied that—
(a) the financial condition and the general character of management of the
applicant are sound;
(b) the volume of business likely to be available to, and the capital structure and
earning prospects of, the applicant will be adequate;
(c) the interests of the general public will be served if the certificate of registration
is granted to the applicant in respect of the class or classes of insurance business
specified in the application; and
(d) the applicant has complied with the provisions of sections 2C, 5, 31A and 32
and has fulfilled all the requirements of this section applicable to him,
the Authority may register the applicant as an insurer and grant him a certificate of
registration.
(2C) Any person aggrieved by the decision of the Authority refusing registration may,
within thirty days from the date on which a copy of the decision is received by him, appeal to
the Central Government.
(2D) The decision of the Central Government on such appeal shall be final and shall
not be questioned before any court.
(3) Notwithstanding anything contained in sub-section (2A), in the case of any insurer
having his principal place of business or domicile outside India the Authority shall withhold
registration or shall cancel a registration already made, if it is satisfied that in the country in
which such insurer has his principal place of business or domicile Indian nationals are
debarred by the law or practice of the country relating to, or applied to insurance from
carrying on the business of insurance, or that any requirement imposed on such insurer
under the provisions of section 62 is not satisfied.
58
(4) The Authority shall cancel the registration of an insurer either wholly or in so far as
it relates to a particular class of insurance business, as the case may be,—
(a) if the insurer fails to comply with the provisions of section 7 or section 98 as
to deposits, or
(aa) if the insurer fails, at any time, to comply with the provisions of section
65VA as to the excess of the value of his assets over the amount of his liabilities, or
(b) if the insurer is in liquidation or is adjudged an insolvent, or
(c) if the business or a class of the business of the insurer has been transferred
to any person or has been transferred to or amalgamated with the business of any
other insurer, or
(d) if the whole of the deposit made in respect of insurance business has been
returned to the insurer under section 9, or
(e) if, in the case of an insurer specified in sub-clause (c) of clause (9) of section
2, the standing contract referred to in that sub-clause is cancelled or is suspended and
continues to be suspended for a period of six months, or
(ee) if the Central Government so directs under sub-section (4) of section 33, and
the Authority may cancel the registration of an insurer—
(f) if the insurer makes default in complying with, or acts in contravention of, any
requirement of this Act or of any rule or any regulation or order made or, any direction
issued thereunder, or
(g) if the Authority has reason to believe that any claim upon the insurer arising
in India under any policy of insurance remains unpaid for three months after final
judgment in regular course of law, or
(h) if the insurer carries on any business other than insurance business or any
prescribed business, or
(i) if the insurer makes a default in complying with any direction issued or order
made, as the case may be, by the Authority under the Insurance Regulatory and
Development Authority Act, 1999, or 41 of 1999.
(j) if the insurer makes a default in complying with or acts in contravention of,
any requirement of the Companies Act, 1956 or the Life Insurance Corporation Act, 1 of 1956.
1956 or the General Insurance Business (Nationalisation) Act, 1972 or the Foreign 31 of 1956.
57 of 1972.
Exchange Regulation Act, 1973.
46 of 1973.
(5) When the Authority withholds or cancels any registration under sub-section (3)
clause (a), clause (aa) or clause (e), clause (ee), clause (f), clause (g), or clause (h) of sub-
section (4), he shall give notice in writing to the insurer of its decision, and the decision shall
take effect on such date as may specify in that behalf in the notice, such date not being less
than one month nor more than two months from the date of the receipt of the notice in the
ordinary course of transmission.
(5A) When the Authority cancels any registration under clause (b), clause (c), or
clause (d), or sub-section (4) the cancellation shall take effect on the date on which notice of
the order of cancellation is served on the insurer.
* * * * *
(5C) Where a registration is cancelled under clause (a), clause (aa), clause (e), clause
(f), clause (g), or clause (h), or clause (i), or clause (j) of sub-section (4), the Authority may at
discretion revive the registration, if the insurer within six months from the date on which the
cancellation took effect makes the deposits required by section 7 or section 98, or complies
with the provisions of section 64VA as to the excess of the value of his assets over the
59
amount of his liabilities or has his standing contract restored or has had an application under
sub-section (4) of section 3A accepted, or satisfies the Authority that no claim upon him
such as is referred to in clause (g) of sub-section (4) remains unpaid or that he has complied
with any requirement of this Act or the Insurance Regulatory and Development Authority
41 of 1999. Act, 1999, or of any rule or any regulation, or any order made thereunder or any direction
issued under those Acts, or that he has ceased to carry on any business other than insurance
business or any prescribed business, as the case may be, and complies with any directions
which may be given to him by the Authority.
* * * * *
3A. (1) An insurer who has been granted a certificate of registration under section 3 Renewal of
shall have the registration renewed annually for each year after that ending on the 31st day registration.
of March, after the commencement of the Insurance Regulatory and Development Authority
41 of 1999. Act, 1999.
(2) An application for the renewal of a registration for any year shall be made by the
insurer to the Authority before the 31st day of December of the preceding year, and shall be
accompanied as provided in sub-section (3) by evidence of payment of the fee as determined
by the regulations made by the Authority which may vary according to the total gross
preminum written direct in India, during the year preceding the year in which the application
is required to be made under this section, by the insurer in the class of insurance business to
which the registration relates but shall not—
(i) exceed one-fourth of one per cent of such premium income or rupees five
crores, whichever is less;
(ii) be less, in any case, than fifty thousand rupees for each class of insurance
business:
Provided that in the case of an insurer carrying on solely re-insurance business, the
provisions of this sub-section shall apply with the modification that instead of the total
gross premium written direct in India, the total premiums in respect of facultative re-insurances
accepted by him in India shall be taken into account.
(3) The fee as determined by the regulations made by the Authority for the renewal of
a registration for any year shall be paid into the Reserve Bank of India or where there is no
office of that Bank, into the Imperial Bank of India acting as the agent of that Bank, or into
any Government treasury, and the receipt shall be sent along with the application for renewal
of the registration.
(4) If an insurer fails to apply for renewal of registration before the date specified in
sub-section (2) the Authority may, so long as an application to the court under sub-section
(5D) of section 3 has not been made, accept an application for renewal of the registration on
receipt from the insurer of the fee payable with the application and such penalty, not exceeding
the fee as determined by the regulations made by the Authority, and payable by him, as the
Authority may require:
Provided that an appeal shall lie to the Central Government from an order passed by
the Authority imposing a penalty on the insurer.
(5) The Authority shall, on fulfilment by the insurer of the requirements of this section,
renew the registration and grant him a certificate of renewal of registration.
* * * * *
4. (1) No insurer, not being a Co-operative Life Insurance Society to which Part IV of Minimum
this Act applies, shall pay or undertake to pay on any policy of life insurance issued after the limits for
annuities and
6 of 1946. commencement of the Insurance (Amendment) Act, 1946, an annuity of less than one hundred other benefits
rupees of a gross sum of less than one thousand rupees exclusive of any profit or bonus secured by
provided that this shall not prevent an insurer from converting any policy into a paid-up policies of
policy of any value or payment of surrender value of any amount. life insurance.
(2) Nothing contained in this section shall apply to any policy of the description
known as a group policy, where the number of persons covered by the policy is not less than
60
fifty or such smaller number as may be approved by the Authority and a standard form of the
policy has been certified in writing by the authority to be a policy of such description or to
any policy undertaking to pay a gross sum of more than five hundred rupees or an annuity
of more than fifty rupees, issued—
(a) by an insurer to any person in his permanent employ in respect of the life of
that person, or
(b) under any scheme, approved by the authority and complying with such
conditions, if any, as he may think fit to impose, whereby premiums due from persons
employed under any employer are collected by or under the supervision of the employer,
or to any policy issued by a Mutual Insurance Company to which Part IV applies and which
the Authority may by order in writing exempt from the provisions of this section, for so long
as the company complies with such conditions, if any, as may be prescribed.
Restriction 5. (1) * * * * *
on name of
insurer. (2) If any insurer, through inadvertence or otherwise, is without such consent as
aforesaid registered by a name identical with that by which an insurer already in existence
whether previously registered or not is carrying on business or so nearly resembling it as to
be calculated to deceive, the first-mentioned insurer shall, if called upon to do so by the
Authority on the application of the second-mentioned insurer, change his name within a time
to be fixed by the Authority:
Provided that nothing in this section shall apply to any insurer carrying on business
before the 27th day of January, 1937, under the Indian Life Assurance Companies Act, 1912: 6 of 1912.
Provided further that in the application of this section of any insurer who begins to
carry on insurance business after the commencement of the Insurance (Amendment) Act,
1946, the reference to an insurer in existence in sub-section (1) and this sub-section shall be 6 of 1946.
construed as including references to a provident society (as defined in Part III) in existence,
whether or not the society is in the course of being dissolved.
(3) No insurer other than a provident society as defined in Part III, who begins to carry
on insurance business after the commencement of this Act, shall adopt as its name and no
such insurer carrying on business before the commencement of this Act shall continue after
the expiry of six months from the commencement thereof to use as its name any combination
of words which includes the word "provident".
Requirement 6. No insurer carrying on the business of life insurance, general insurance or re-
as to capital. insurance in India on or after the commencement of the Insurance Regulatory and Development
Authority Act, 1999, shall be registered unless he has,— 41 of 1999.
(i) a paid-up equity capital of rupees one hundred crore in case of a person
carrying on the business of life insurance or general insurance; or
(ii) a paid-up equity capital of rupees two hundred crores in case of a person
carrying on exclusively the business as a re-insurer:
Provided that in determining the paid-up equity capital specified under clause (i) or
clause (ii) the deposit to be made under section 7 and any preliminary expenses incurred in
the formation and registration of the company shall be excluded:
Provided further that an insurer carrying on business of life insurance, general insurance
or re-insurance in India before the commencement of the Insurance Regulatory and
Development Authority Act, 1999 and who is required to be registered under this Act, shall 41 of 1999.
have a paid-up equity capital in accordance with clause (i) and clause (ii), as the case may be,
within six months of the commencement of that Act.
61
6A. (1) No Public company limited by shares having its registered office in India, shall Requirements
carry on life insurance business, unless it satisfies all the following conditions, namely:— as to capital
structure and
(i) that the capital of the company consists only of ordinary shares each of voting rights
and
which has a single face value; maintenance
(ii) that, except during any period not exceeding one year allowed by the company of registers of
beneficial
for payment of calls on shares, the paid-up amount is the same for all shares, whether owners of
existing or new: shares.
Provided that the conditions specified in this sub-section shall not apply to a public
47 of 1950. company which has, before the commencement of the Insurance (Amendment) Act, 1950,
issued any shares other than ordinary shares each of which has a single face value or any
shares the paid-up amount whereof is not the same for all of them for a period of three years
from such commencement.
(2) Notwithstanding anything to the contrary contained in any law for the time being
inforce or in the memorandum or articles of association but subject to the other provisions
contained in this section the voting right of every shareholder of any public company as
aforesaid shall in all cases be strictly proportionate to the paid-up amount of the shares held
by him.
(3) No public company as aforesaid which carries on life insurance business shall,
47 of 1950. after the commencement of the Insurance (Amendment) Act, 1950, issue any shares other
than ordinary shares of the nature specified in sub-section (1).
(4) A public company as aforesaid which carries on life insurance business—
(a) shall maintain, in addition to the register or members to be maintained under
7 of 1913. the Indian Companies Act, 1913, register of shares in which shall be entered the name,
occupation and address of the beneficial owner of each share, and shall incorporate
therein any change of beneficial owner declared to it within fourteen days from the
receipt of such declaration;
(b) shall not register any transfer of its shares—
(i) unless, in addition to compliance being made with the provisions of
7 of 1913. section 34 of the Indian Companies Act, 1913 the transferee furnishes a declaration
in the prescribed form as to whether he proposes to hold the shares for his own
benefit or as a nominee, whether jointly or severally, on behalf of others, and in
the latter case giving the name, occupation and address of the beneficial owner
or owners, and the extent of the beneficial interest of each;
(ii) where, after the transfer, the total paid-up holding of the transferee in
the shares of the company is likely to exceed five per cent., of its paid-up capital
or where the transferee is a banking or an investment company, is likely to
exceed two and a half per cent. of such paid-up capital, unless the previous
approval of the Authority has been obtained to the transfer;
(iii) where, the nominal value of the shares intended to be transferred by
any individual, firm, group, constituents of a group, or body corporate under
the same management, jointly or severally exceeds one per cent. of the paid-up
equity capital of the insurer, unless the previous approval of the Authority has
been obtained for the transfer.
Explanation.—For the purposes of this sub-clause, the expressions "group"and
"same management" shall have the same meanings respectively assigned to them in
54 of 1969. the Monopolies and Restrictive Trade Practices Act, 1969.
* * * * *
62
(6) If the total paid-up holding of any person in the shares of a compny referred to in
sub-section (1) on the commencement of the Insurance (Amendment) Act, 1950, exceed two 47 of 1950.
and a half per cent. of its paid-up capital where that person is a banking company or an
investment company, or five per cent. of its paid-up capital in any other case, he shall not be
entitled to any vote as a shareholder of the company in respect of such excess holding of
shares.
(7) Where the total paid-up holding of any person in the shares of a company referred
to in sub-section (1) on the date of the commencement of the Insurance (Amendment) Act,
1950 exceeds five per cent. of its paid-up capital where that person is a banking company or 47 of 1950.
an investment company, or ten per cent. if its paid-up capital in any other case, he shall
dispose of the excess holding of shares within three years from such commencement or such
further period not exceeding two years as may be allowed to him by the Central Government.
(8) If, after the expiry of three years or of such further period as may be allowed to any
person under sub-section (7), the total paid-up holding of any such person has not been
reduced to the limits specified in that sub-section, any shares in excess of the limits
specified in that sub-section shall vest in the Administration-General of the State in which
the registered office of the company concerned is situate and the Administrator General
shall take such steps as may be necessary for taking charge of any property which has been
so vested in him and shall dispose of the said shares and the proceeds thereof in such
manner as may be prescribed.
(9) Subject to the other provisions contained in this section, but notwithstanding
anything contained in the Indian Companies Act, 1913, or in the memorandum or articles of 7 of 1913.
association of any such company as is referred to in sub-section (1), no such company shall
refuse to register the transfer of any shares where the transfer is for the purpose of
securing compliance with the provision of sub-sections (7) and (8).
(10) The Central Government may, subject to such restrictions as it may think fit to
impose, exempt from the operation of sub-sections (6), (7) and (8) any insurance company,
in any case where the total paid-up holding of such insurance company in shares of any
other insurance company exceeds the limits specified in the said sub-sections, if the other
insurance company is or is to be made a subsidary company of the insurance company.
(11) The provisions of this section, except those of sub-sections (7), (8) and (9) shall,
on and from the commencement of the Insurance (Amendment) Act, 1968, also apply to 62 of 1968.
insures carrying on general insurance business subject to the following modifications,
namely:—
(i) that references in sub-sections (1), (3), (5) and (6) to the Insurance
(Amendment) Act, 1950, shall be construed as references to the Insurance (Amendment) 47 of 1950.
Act, 1968; and 62 of 1968.
(ii) references in sub-section (10) to sub-sections (7) and (8) shall be omitted.
Explanation.—For the purposes of this section, the holding of a person in the shares
of a company shall be deemed to include—
(i) the total paid-up holding in such shares held by such person in the name
of others; and
(ii) if any shares of the company are held—
(a) by a public limited company, of which such person is a member holding
more than ten per cent. of the paid-up capital, or
(b) by a private limited company, of which such person is a member, or
(c) by a company, of which such person is a managing director, manager,
managing agent or in which he has a controlling interests, or
63
(d) by a firm in which such person is a partner, or

(e) by such person jointly with others,
such part of the total paid-up holding of the company or firm or of the total joint holding in
those shares, as is proportionate of the contribution made by such peson to the paid-up
capital of the company, the paid-up capital of the firm or the joint holding, as the case may
be.
6AA. (1) No promoter shall at any time hold more than twenty-six per cent. or such Manner of
other percentage as may be prescribed, of the paid-up equity capital in an Indian insurance divesting
excess
company: shareholding
by promoter
Provided that in a case where an Indian insurance company begins the business of in certain
life insurance, general insurance or re-insurance in which the promoters hold more than cases.
twenty-six per cent. of the paid-up equity capital or such other excess percentage as may
be prescribed, the promoters shall divest in a phased manner the share capital in excess of
the twenty-six per cent. of the paid-up equity capital or such excess paid-up equity capital
as may be prescribed, after a period of ten years from the date of the commencement of
the said business by such Indian insurance company or within such period as may be
prescribed by the Central Government.
Explanation.—For the removal of doubts, it is hereby declare that nothing contained
in the proviso shall apply to the promoters being foreign comapny, referred to in sub-clause
(b) of clause (7A) of section 2.
(2) The manner and procedure for divseting the excess share capital under sub-
section (1) shall be specified by the regulations made by the Authority.
6B. (1) For the prupose of enabling any public company carring on life insurance Provision for
business or bring its capital structure into conformity with the requirements of section 6A, securing
compliance
an officer appointed on this behalf by the Central Government may, notwithstanding anything with
7 of 1913. contained in the Indian Companies Act, 1913,— requirements
relating to
(a) examine any scheme proposed for the purpose aforesaid by the directors of capital
the company: structure.
Provided that—
(i) the scheme has been placed before a meeting of the shareholders for
their opinion and has been forwarded to the officer together with the opinion of
the shareholders thereon, and
(ii) the scheme does not involve any diminution of the liability of the
shareholders in respect of unpaid-up share capital;
(b) invite objections and suggestions in respect of the scheme so proposed;
and
(c) after considering such objections and suggestions to the scheme so proposed,
sanction it with such modifications as he may consider necesssary or desirable.
(2) Any shareholder or other person aggrieved by the decision of the officer sanctioning
a scheme under sub-section (1) may, within ninety days of date of the order sanctioning the
scheme, prefer an appeal to the High Court within whose jurisdiction the registered office of
the insurer is situate for the purpose of modifying or correcting any such scheme for the
purpose specified in sub-section (1).
(3) The decision of the High Court where an appeal has been preferred to it under sub-
section (2), or of the officer aforesaid where no such appeal has been preferred, shall be final
and binding on all the shareholders and other persons concerned.
(4) The provisions of this section shall, on and from the commencement of the Insurance
62 of 1968. (Amendment) Act, 1968, also apply to insurers carrying on general insurance business.
64
Conversion 6C. (1) Where a public company limited by shares carrying on insurance business has
of company
passed a special resolution for converting itself into a public company limited by guarantee,
limited by
shares into it may apply to the Central Government with a scheme for putting the special resolution into
company effect, including any provision for the alternation of the memorandum or articles of association
limited by insofar as it may be necessary for this purpose.
guarantee.
(2) If the Central Government, after giving such notice to any person concerned as it
thinks fit, is satisfied—
(a) that the scheme makes suitable provision with respect to the repayment,
conversion or liquidation of the paid up capital of the company,
(b) that the consent of the creditors to the conversion of the company limited by
shares into a company limited by guarantee has been obtained, or that suitable
provisions have been made for discharging, determining or securing the debts or
claims of such creditors, and
(c) that the scheme is otherwise reasonable, it may sanction the scheme and
thereupon the scheme shall become binding on the company and on all the persons
concerned.
(3) Against the decision of the Central Government sanctioning a scheme under sub-
section (2), any person aggrieved thereby may, within ninety days of the date of the order
sanctioning the scheme, prefer an appeal to the High Court within whose jurisdiction the
registered office of the insurer is situate.
(4) The decision of the High Court where an appeal has been preferred to it under sub-
section (3) or of the Central Government where no such appeal has been preferred, shall be
final and binding on all the persons concerned.
(5) Where a scheme has been sanctioned under this section, the company shall file
with the Registrar of Companies a certified copy of the scheme as sanctioned, and thereupon
the provisions of the Indian Companies Act, 1913, relating to companies limited by guarantee 7 of 1913.
shall become applicable to the company.
Deposits. 7. (1) Every insurer shall, in respect of the insurance business carried on by him in
India, deposit and deep deposited with the Reserve Bank of India in one of the offices in
India of the Bank for and on behalf of the Central Government the amount hereafter specified,
either in cash or in approved securities estimated at the market value of the securities on the
day of deposit, or partly in cash and partly in approved securities so estimated,—
(a) in the case of life insurance business, a sum equivalent to one per cent of his
total gross premium written in India, in any financial year commencing after the 31st
day of March, 2000, not exceeding rupees ten crores;
(b) in the case of general insurance business, a sum equivalent to three per cent
of his total gross premium written in India, in any financial year commencing after the
31st day of March, 2000 not exceeding rupees ten crores;
(c) in the case of re-insurance, a sum of rupees twenty crores:
Provided that, where the business done or to be done in marine insurance only and
relates exclusively to country craft or its cargo or both, the amount to be desposited under
this sub-section shall be one hundred thousand rupees only:
Provided further that in respect of any insurer not having a share capital and carrying
on only such insurance business as in the opinion of the Central Government is not carried
on ordinarily by insurers under separate policies, the Central Government may, by notification
in the Official Gazette, order that the provisions of this sub-section shall apply to such
insurer with the modification that instead of the sum of rupees twenty lakhs or rupees ten
65
lakhs, as the case may be, the deposit to be made by such insurer shall be such amount,
being not less than one hundred and fifty thousand rupees, as may be specified in the said
order.
(2) Where the insurer is an insurer specified in sub-clause (c) of clause (9) of section
2, he shall be deemed to have complied with the provisions of this section as to deposits, if
in respect of insurance business carried on by him in India under a standing contract of the
nature referred to in sub-clause (c) of clause (a) of section 2 a deposit of an amount one-and-
a-half times that specified in sub-section (1) has been made in the Reserve Bank of India in
one of the offices in India of the Bank for and on behalf of the Central Government in cash or
approved securities estimated at the market value of securities on the day of deposit by or on
behalf of the underwriters who are members of the Society of Lloyd's with whom he has his
standing contract.
(3) Where the depsoit is to be made by an insurer not carrying on insurance business
62 of 1968. in India immediatley before the commencement of the Insurance (Amendment) Act, 1968, a
deposit of rupees ten lakhs shall be made before the application for registration is made, and
the provisions of clause (ii) of sub-section (IA) shall apply to such insurer after his
registeration as they apply to an insurer specified in clause (a) of sub-section (1).
(4) An insurer shall not be registered for any class of insurance business in addition to
the class or classes for which is already registered until the full required under sub-section
(1) has been made.
(5) Where an insurer who intends to become a member of a group, does not carry on
all the classes of insurance business carried on by the other insurers in such group, or, where
out of the several insurers who desire to from themselves into a group, any insurer does not
carry on all the classes of insurance business carried on by the other insurers who desire to
form themselves into the group, such insurer may be registered for that class or those
classes of insurance business which is or are carried on by the other insurers of the group or
the proposed group, as the case may be, and where any application for registration is made
by any such insurer, the Authority may notwithstanding anything contained in sub-section
(2A) of section 3 or sub-section (4), register such insurer for one or more additional classes
of inssurance, if the following conditions are fulfilled, namely:—
(a) the Authority is satisfied that registration for the proposed one or more
additional classes of insurance business would qualify the insurer to become a member
of a group;
(b) agreements have been executed by all the Insurers in the group or proposed
group, as the case may be, and such agreements, in the opinion of the Authority,
satisfy the requirements of the Explanation to sub-section (IB); and
(c) the insurer has, after the commencement of the Insurance (Amendment) Act,
62 of 1968. 1968 made deposit of a sum not less than the total of all the instalments of deposit
which he would have been required to make after such commencement till the date of
his becoming a member of the group, he had been a member of the group from such
commencement.
(6) The Authority shall cancel the registration made in pursuance of the provisions of
sub-section (5), if the insurer referred to therein fails to become, whithin a period of three
months from the date of such registration, a member of the group or proposed group, as the
case may be, and, where such registration has been cancelled, the provisions of this Act
shall apply to the insurer as if he had not been registered for the class or classes of insurance
business in relation to which his registration has been cancelled.
(7) Securities already deposited with the Authority of Currency in compliance with the
6 of 1912. Indian Life Assurance Companies Act, 1912, shall be transferred by him to the Reserve Bank
of India and shall, to the extent of their market value as at the date of the commencement of
this Act, be deemed to be deposited under this Act, as the instalment or as part of the
66
instalment to be made under the foregoing provisions of this section before the application
for registration is made whether any such application is or is not in fact made.
(8) A deposit made in cash shall be held by the Reserve Bank of India to the credit of
the insurance and shall except to the extent, if any, to which the cash has been invested in
securities under sub-section (9A), be returnable to the insurer in cash in any case in which
under the provisions of this Act a deposit is to be returned; and any interest accruing due
and collected on securities deposited under-sub-section (1) or sub-section (2) shall be paid
to the insurer, subject only to deduction of the normal commission chargeable for the realisation
of interest.
(9) The insurer may at any time replace any securities deposited by him under this
section with the Reserve Bank of India either by cash or by other approved securities or
partly by cash and partly by other approved securities, provided that such cash, or the value
of such other approved securities estimated at the market rates prevailing at the time of
replacement, or such cash together with such value, as the case may be, is not less than the
value of the securities replaced estimated at the market rates prevailing when they were
deposited.
(9A) The Reserve Bank of India shall, of so requested by the insurer,—
(a) sell any securities deposited by him with the Bank under this section
and hold the cash realised by such sale as deposit, or
(b) invest in approved securities specified by the insurer the whole or any
part or a deposit held by it in cash or the whole or any part of cash received by
it on the sale of or on the maturing of securities deposited by the insurer, and
hold the securities in which investment is so made as deposit,
and may charge the normal commission on such sale or on such investment.
(9B) Where sub-section (9A) applies,—
(a) if the cash realised by the sale of or on the maturing of the securities
(excluding in the former case the interest accrued) falls short of the market value
of the securities at the date on which they were deposited with the bank, the
insurer shall make good the deficiency by a further deposit either in cash or in
approved securities estimated at the market value of the securities on the day on
which they are deposited, or partly in cash and partly in approved securities so
estimated, within a period of two month from the date on which the securities
matured or were sold or where the securities matured or were sold before the 21st
day of March, 1940, within a period of four months from the commencement of
the Insurance (Amendment) Act, 1940; and unless he does so the insurer shall 20 of 1940.
be deemed to have failed to comply with the requirements of this section as to
the deposits; and
(b) if the cash realised by the sale of or on the maturing of the securities
(excluding in the former case the interest accrued) exceeds the market value of
the securities at the date on which they were deposited with the Bank, the
Central Government may, if satisfied that the full amount required to be deposited
under sub-section direct the required to be deposited under sub-section (1) is in
deposit, direct the Reserve Bank to return the excess.
(10) If any part of a deposit made under this section is used in the discharge of any
liability of the insurer, the insurer shall deposit such additional sum in cash or approved
securities of the estimated at the market value of the securities on the day of deposit, or
partly in cash and partly in such securities, as will make up the amount so used. The insurer
shall be deemed to have failed to comply with the requirements of sub-section (1), unless the
deficiency is supplied within a period of two months from the date when the deposit or any
part thereof is so used for discharge of liabilities.
67
8. (1) Any deposit made under section 7 or section 98 shall be deemed to be part of the Reservation
assets of the insurer but shall not be susceptible of any assignment or charge; nor shall it be of deposits.
available for the discharge of any liability of the insurer other than liabilities arising out of
policies of insurance issued by the insurer so long as any such liabilities remain undischarged;
nor shall it be liable to attachment in execution of any decree except a decree obtained by a
policyholder of the insurer in respect of a debt due upon a policy which debt the policyholder
has failed to realise in any other way.
(2) Where a deposit is made in respect of life insurance business the deposit made in
respect thereof shall not be available for the discharge of any liability of the insurer other
than liabilities arising out of policies of life insurance issued by the insurer.
9. Where an insurer has ceased to carry on in India all classes of insurance business Refund of
and his liabilities in India in respect of all classes of insurance business have been satisfied deposit.
or are otherwise provided, for the court may, on the application of the insurer,order the return
to the insurer of the deposit made by him under this Act.
10. (1) Where the insurer carries on business of more than one of the following Separation of
classes, namely, life insurance, fire insurance, marine insurance or miscellaneous insurance, accounts and
he shall keep a separate account of all receipts and payments in respect of each such class of funds.
insurance business and where the insurer carries on business of miscellaneous insurance
whehter alone or in conjunction with business of another class, he shall, unless the authority
waives this requirement in writing, keep a separate account of all receipts and payments in
respect of each of such sub-classes of miscellaneous insurance business as may be prescribed
in this behalf:
Provided that no sub-class of miscellaneous insurance business shall be, prescribed
under this sub-section if the insurance business comprised in the sub-class consist of
insurance contracts which are terminable by the insurer at intervals not exceeding twelve
months and under which, if a claim arises, the insurer's liability to pay benefit ceases within
one year of the date on which the claim arose.
(2) Where the insurer carries on the business of life insurance all receipts due in
respect of such business, shall be carried to and shall form a separate fund to be called the
life insurance fund the assets of which shall, after the expiry of six months from the
6 of 1946. commencement of the Insurance (Amendment) Act, 1946, be kept distinct and separate from
all other assets of the insurer and the deposit made by the insurer in respect of life insurance
business shall be deemed to be part of the assets of such fund; and every insurer shall,
within the time limited in suh-section (1) of section 15 in regard to the furnishing of the
statements and accounts referred to in section 11, furnish to the Controller a statement
showing in detail such assets as at the close of every calendar year duly certified by an
auditor or by a person qualified to audit under the law of the insurer's country:
Provided that such statement shall, in the case of an insurer to whom section 11
applies, be set out as part of the balance-sheet mentioned in clause (a) of sub-section (1) of
that section:
Provided further that an insurer may show in such statement all the assets held in his
life department, but at the same time showing any deductions on account of general reserves
and other liabilities of that department:
Provided also that the Authority may call for a statement similarly certified of such
assets as at any other date specified by him to be furnished within a period of three months
from the date with reference to which the statement is called for.
11. (1) Every insurer, in the case of an insurer specified in sub-clause (a) (ii) or sub- Accounts and
clause (b) of clause (9) of section 2 in respect of all insurance business transacted by him, balance-sheet.
and in the case of any other insurer in respect of the insurance business transacted by him
in India shall at the expiration of each financial year prepare with reference to that year—
(a) in accordance with the regulations contained in Part I of the First Schedule,
a balance-sheet in the form set forth in Part II of that Schedule;
68
(b) in accordance with the regulations contained in Part I of the Second Schedule,
a profit and loss account in the forms set forth in Part II of that Schedule, except where
the insurer carries on business of one class only of the following classes, namely, life
insurance, fire insurance of marine insurance and no other business;
(c) in respect of each class or sub-class of insurance business for which he is
required under sub-section (1) of section 10 to keep a separate account of receipts and
payments, a revenue account in accordance with the regulations, and in the form or
forms, set forth in the Third Schedule applicable to that class or sub-class of insurance
business.
(1A) Notwithstanding anything contained in sub-section (1), every insurer, on or
after the commencement of the Insurance Regulatory and Development Authority Act, 1999, 41 of 1999.
in respect of insurance business transacted by him and in respect of his shareholders funds,
shall, at the expiration of each financial year, prepare with reference to that year, a balance-
sheet, a profit and loss account, a separate account of receipts and payments, a revenue
account in accordance with the regulations made by the Authority.
(IB) Every insurer shall keep separate accounts relating to funds of shareholders and
policyholders.
(2) Unless the insurer is a company as defined in clause (2) of sub-section (1) of
section 2 of the Indian Companies Act, 1913 accounts and statements referred to in sub- 7 of 1913.
section (1) shall be signed by the insurer, or in the case of a company by the chairman, if any
and two directors and the principal officer of the company, or in the case of a firm by two
partners of the firm, and shall be accompanied by a statement containing the names,
descriptions and occupations of, and the directorships help by, the persons in charge of the
management of the business during the period to which such accounts and statement refer
and by a report on the affairs of the business during that period.
(3) Where an insurer carrying on the business of insurance at the commencement of
this Act has prepared the balance-sheet and accounts required by the Indian Life Assurance
Companies Act, 1912, or has based his accounts upon the financial and not the calender year, 6 of 1912.
the provisions of this section shall, if the Central Government so directs in any case, apply
until the 31st day of December, 1939, as if sub-section (1) reference to the calendar year
where references to the financial year.
Audit. 12. The balance-sheet, profit and loss account, revenue account and profit and loss
appropriation account of every insurer, in the case of an insurer specified in sub-clause (a)
(ii) or sub-clause (b) of clause (9) of section 2 in respect of all insurance business transancted
by him, and in the case of any other insurer in respect of the insurance business transacted
by him in India, shall, unless they are subject to audit under the Indian Companies Act, 1913 7 of 1913.
be audited annually by an auditor, and the auditor shall in the audit of all such accounts have
the powers of, exercise the functions vested in, and discharge the duties and be subject to
the liabilities and penalties imposed on, auditors of companies by section145 of the Indian
Companies Act, 1913. 7 of 1913.
Actuarial 13. (1) Every insurer carrying on life insruance business shall, in respect of the life
report and insurance transacted by him in India, and also in the case of an insurer specified in sub-
abstract.
clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all life insurance
business transacted by him, once at least every year course an investigation to be made by
an actuary into the financial condition of the life insurance business carried on by him,
including a valuation of his liability in respect thereto and shall cause an abstract of the
report of such actuary to be made in accordance with the regulations contained in Part I of
the Fourth Schedule and in conformity with the requirements of Part II of that Schedule:
Provided that the Authority may, having regard to the circumstances of any particular
insurer, allow him to have the investigation made as at a date not later than two years from the
date as at which the previous investigation was made:
69
Provided further that for an insurer carrying on life insurance business in India at the
47 of 1950. commencement of the Insurance (Amendment) Act, 1950, the last date as at which the first
investigation after such commencement should be caused to be made by an actuary shall
be—
(a) the 31st day of December, 1950, or the date of expiration of five years from the
date at which the last investigation was made by an actuary before such commencement,
which ever is earlier, where the said last investigation was at a date—
(i) before the 31st day of December, 1946 but not more than five years
before such commencement, or
(ii) after the 30th day of December, 1946 but before the 31st day of
December, 1947, and had disclosed a deficit in the life insurance fund; or
(b) the 31st day of December, 1951, where the last investigation by an actuary
before such commencement was at a date—
(i) after the 30th day of December, 1946, but before the 31st day of
December, 1947, and did not disclose a deficit in the life insurace fund; or
(ii) after the 31st day of December, 1947, but before the 31st day of
December, 1948;
(c) the 31st day of December, 1952, where the last investigation by an actuary
before such commencement was as at any date after 30th day of December, 1948, but
before the 1st day January, 1950:
Provided also that for an insurer carrying on life insurance business in India immediately
before the Commencement of the Insurance Regulatory and Development Authority Act,
41 of 1999. 1999, the last date as which the first investigation after such commencement should be
caused by an actuary, shall be the 31st day of March, 2001:
Provided also that, in the case of an insurer who has not caused an investigation to be
made by an actuary as at any date prior to such commencement, the date of commencement
of life insurance business in India shall, for the purpose of the preceding proviso, be deemed
to be the date as at which the last investigation was made by an actuary before such
commencement and such investigation shall be deemed to have disclosed no deficit in the
life insurance fund:
Provided also that every insurer, on or after the commencement of the Insurance
41 of 1999. Regulatory and Development Authority Act, 1999, shall cause an abstract of the report of the
actuary to be made in the manner specified by the regulations made by the Authority.
* * * * *
(4) There shall be appended to every such abstract a statement, in conformity with
their requirement of a Part II of the Fifth Schedule and prepared in accordance with the
regulations contained in Part I of that Schedule of the life insurance business in force at the
date to which the account of the insurer are made up for the purposes of such abstract:
Provided that, if the investigation referred to in sub-sections (1) and (2) is made
annually by any insurer, the statement need not be appended every year but shall be appended
at least once in every three years:
Provided further that the statement referred to in sub-section (4) shall be appended in
the form and in the manner specified by the regulations made by the Authority.
* * * * *
(6) The provisions of this section relating to the life insurance business shall apply
also to any such sub-class of insurance business included in the class "Miscellaneous
Insurance" as may be prescribed under sub-section (1) of section10; and the Authroity may
70
authorise such modification and variation of regulations contained in Part I of the Forth and
Fifth Schedules and of the requirement of Part II of those Schedules as may be necessary to
facilitate their application to any such sub-class of insurance business:
Provided that, if the Authority is satisfied that the number and amount of transactions
carried out by an insurer in any such sub-class of insurance business is so small as to render
periodic investigation and valuation unnecessary, it may exempt that insurer from the
operaiton of this sub-section in respect of that sub-class of insurance business.
Register of 14. Every insurer in the case of insurer specified in sub-clause (a) (ii) or sub-clause (b)
policies and of clauses (9) of section 2 in respect of all business transacted by him, and in the case of any
register of
claims. other insurer in respect of the insurance business transacted by him in India, shall maintain—
(a) a register or record of policies in which shall be entered in respect of every
policy issued by the insurer, the name and address of the policy holder, the date when
the policy was effected and a record of any transfer, assignment of nomination of
which the insurer has notice, and
(b) a register of record of claims, in which shall be entered every claim made
together with the date of the claim, the name and address of the claimant and the date
on which the claim was discharged, or, in the case of a claim which is rejected, the date
of rejection and the ground therefor.
Submission of 15. (1) The audited accounts and statements referred to in section 11 or sub-section
returns. (5) of section 13 and the abstract and statement referred to in section 13 shall be printed, and
four copies thereof shall be furnished as returns to the Authority within six months from the
end of the period to which they refer:
Provided that the said period of six months shall in the case of insurers having their
principal place of business or domicile outside India and in the case of insurers constituted,
incorporated or domiciled in India but also carrying on business outside India be extended
by three months, and provided further that the Central Government may in any case extend
the time allowed by this sub-section for the furnishing of such returns by a further period not
exceeding three months.
(2) Of the four copies so furnished one shall be signed in the case of a company by the
chairman and two directors and by the principal officer of the company and, if the company
has a managing director or managing agent, by that director or managing agent, in the case
of a firm, by two partners of the firm, and, in the case of an insurer being an individual, by the
insurer himself and one shall be singed by the auditor who made the audit or the actuary who
made the valuation, as the case may be.
(3) Where the insurer's principal place of business or domicile is outside India he shall
forward to the Authority along with the documents referred to in section 11, the balance-
sheet, profit and loss account and revenue account and the valuation reports and valuation
statements, if any, which the insurer is required to file with the public authority of the country
in which the insurer is constituted, incorporated or domiciled, or, where such documents are
not required to be filed, a certified statement showing the total assets and liabilities of the
insurer at the close of the period covered by the said documents and his total income and
expenditure during that period.
Returns by 16. (1) Where, by the law of the country in which an insurer, not being an insurer
insurers specified in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2, is constituted,
established
outside India. incorporated or domiciled, the insurer is required to prepare and to furnish to a public
authority of that country documents of substantially the same nature as the documents
required to be furnished as returns in accordance with the provisions of section 15, the
provisions of sub-section (2) of this section shall apply to such insurer in lieu of the provisions
of sections 11, 12, 13, and 15.
71
(2) The insurer shall, within the time specified in sub-section (1) of section 15, furnish
to the Authority four certified copies in the English language of every balance-sheet, account,
abstract, report and statement supplied to the public authority referred in sub-section (1) of
this section, and in addition thereto, four certified copies in the English language of each of
the following statements, namely:—
(a) a statement audited by an auditor or by a person duly qualified under the law
of the insurer in India as at the date of any balance-sheet so furnished;
(b) for each class or sub-class of insurance business for which he is required
under sub-section (1) of section 10 to keep a separate account of receipts and payments,
a revenue account for the period covered by any account so furnished, prepared in
accordance with the regulations and in the form or forms, set forth in the Third Schedule
applicable to that class or sub-class of insurance business and similarly audited showing
separately with respect to business transacted by the insurer in India the details
required to be supplied in a revenue account furnished under this clause of this sub-
section;
(c) a separate abstract of the valuation report in respect of all business transacted
in India in each class or sub-class or insurance business to which section 13 refers,
prepared in the manner required by that section; and
(d) a declaration in the prescribed form stating that all amounts received by the
insured directly or indirectly whether from his head office or from any other source
outside India have been shown in the revenue account except such sums as properly
appertain to the capital account.
17. Where an insurer, being a company incorporated under the Indian Companies Act, Exemption
7 of 1913. 1913 or under the Indian Companies Act, 1882 or under the Indian Companies Act, 1866 or from certain
6 of 1882. under any Act repealed thereby, in any year furnishes his balance-sheet and accounts in provisions of
10 of 1866. the Indian
accordance with the provisions of section 15, he may at the same time send to the Registrar Companies
of Companies, copies of such balance-sheet and accounts; and where such copies are so Act, 1913.
sent, it shall not be necessary for the company to file copies of the balance-sheet and
account with the Registrar as required by sub-section (1) of section 134 of the first mentioned
Act and such copies so sent shall be chargeable with the same fees and shall be dealt with in
all respects as if they were filed in accordance with that section.
17A. Nothing in this Act shall apply to the preparation of accounts by an insured and This Act not
the audit and submission thereof in respect of any accounting year which has expired prior to apply to
to the commencement of this Act, and notwithstanding the other provisions of this Act such preparation
of accounts,
accounts shall be prepared, audited and submitted in accordance with the law in force etc., for
immediately before the commencement of this Act. periods prior
to this Act
* * * * * coming into
force.
20. (1) Every return furnished to the Authority or certified copy thereof shall be kept Custody and
by the Authority and shall he open to inspection; and any person may procure a copy of any inspection of
such return, or of any part thereof, on payment of a fee of six annas for every hundred words documents
and supply of
or fractional part thereof required to be copied, any five figures being deemed equivalent to copies.
one word.
(2) A printed or certified copy of the accounts, statements and abstract furnished in
accordance with the provisions of section 15 or section 16 shall, on the application of any
shareholder or policy holder made at any time within two years from the date on which the
documents was so furnished, be supplied to him by the insurer within fourteen days when
the insurer is constituted, incorporated or domiciled in India and in any other case within one
month of such application.
(3) A copy of the memorandum and articles of association of the insurer, if a company
shall on the application of any policy holder, be supplied to him by the insurer on payment of
one rupee.
72
Powers of 21. (1) If it appears to the Authority that any return furnished to it under the provisions
Authority of this Act is incorrect or defective in any respect it may—
regarding
returns. * * * * *
(d) decline to accept any such return unless the inaccuracy has been corrected
or the deficiency has been supplied before the expiry of one month from the date on
which the requisition asking for correction of the inaccuracy or supply of the deficiency
was delivered to the insurer or of such further time as the Authority may specify in the
requisition and if it declines to accept any such return, the insurer shall be deemed to
have failed to comply with the provisions of section 15 or section 16 for section 28 or
section 28A or section 28B or section 64V relating to the furnishing of returns.
(2) The Court may on the application of an insurer and after hearing the Authority
cancel any order made by Authority under clauses (a), (b) or (c) of sub-section (1) or may
direct the acceptance of any return which the Authority has declined to accept, if the insurer
satisfied the Court the action of the Authority was in the circumstances unreasonable:
Provided that no application under this sub-section shall be entertained unless it is
made before the expiration of four months from the time when the Authority made the order
or declined to accept the return.
Powers of 22. (1) If it appears to the Authority that an investigation or valuation to which section
Authority to 13 refers or an abstract of a valuation report furnished under clause (c) of sub-section (2) of
order
revaluation.
section 16 does not properly indicate the condition of the affairs of the insurer by reason of
the faulty basis adopted in the valuation, it may, after giving notice to the insurer and giving
him an opportunity to be heard, cause an investigation and valuation as at such date as the
Authority may specify to be made at the expense of the insurer by an actuary appointed by
the insurer for this purpose and approved by the Authority and the insurer shall place at the
disposal of the actuary so appointed and approved all the material required by the actuary
for the purposes of the investigation and valuation within such period, not being less than
three months, as the Authority may specify.
(2) The provisions of sub-sections (1) and (4) of section 13, and of sub-sections (1)
and (2) of section 15 or, as the case may be, of sub-section (2) of section 16, shall apply in
relation to an investigation and valuation under this section:
Provided that the abstract and statement prepared as the result of such investigation
and valuation shall be furnished by such date as the Authority may specify.
* * * * *
Investment, Loans and Management
Investment 27. (1) Every insurer shall invest and at all times keep invested assets equivalent to
of assets. not less than the sum of—
(a) the amount of this liabilities to holders of life insurance policies in India on
account of matured claims, and
(b) the amount required to meet the liability on policies of life insurance maturing
for payment in India, less—
(i) the amount of premimums which have fallen due to the insurer on such
policies but have not been paid and the days of grace for payment of which have
not expired, and
(ii) any amount due to the insurer for loans granted on and within the
surrender values of policies of life insurance maturing for payment in India
issued by him or by an insurer whose business he has acquired and in respect of
which he has assumed liability, in the manner following, namely, twenty-five per
cent. of the said sum in Government Securities, a further sum equal to not less
73
than twenty-five per cent. of the said sum in Government securities or other
approved securities and the balance in any of the approved investments specified
in sub-section (1) of section 27A or, subject to the limitations conditions and
restrictions specified in sub-section (2) of that section, in any other investment.
(2) For the purposes of sub-section (1),—
(a) the amount of any deposit made under section 7 or section 98 by the insurer
in respect of his life insurance business shall be deemed to be assets invested or kept
invested in Government securities;
(b) the securities of, or guaranteed as to principal and interest by, the Government
of the United Kingdom shall be regarded as approved securities other than Government
securities for a period of four years from the commencement of the Insurance
47 of 1950. (Amendment) Act, 1950, in the manner and to the extent herinafter specified, namely:—
(i) during the first year, to the extent of twenty-five per cent. in value of the
sum referred to in sub-section (1);
(ii) during the second year, to the extent of eighteen and three fourth per
cent. in value of the said sum;
(iii) during the third year, to the extent of twelve and a half per cent. in
value of the said sum; and
(iv) during the fourth year, to the extent of six and a quarter per cent, in
value of the said sum:
Provided that, if the Authority so directs in any case, the securities specified in
clause (b) shall be regarded as approved securities other than Government securities
for a longer period than four years, but not exceeding six years in all, and the manner
in which and the extent to which the securities shall be so regarded shall be as specified
in the direction;
(c) any prescribed assets shall, subject to such conditions, if any, as may be
prescribed, be deemed to be assets invested or kept invested in approved investments
specified in sub-section (1) of section 27A.
(3) In computing the assets referred to in sub-section (1),—
(a) any investment made with reference to any currency other than the Indian
rupee which is in excess of the amount required to meet the liabilities of the insurer in
India with reference to that currency, to the extent of such excess; and
(b) any investment made in the purchase of any immovable property outside
India or on the security of any such property,
shall not be taken into account:
Provided that nothing contained in this sub-section shall affect the operation of sub-
section (2):
Provided further that the Authority may, either generally or in any particular case,
direct that any investment, whether made before or after the commencement of the Insurance
47 of 1950. (Amendment) Act, 1950, and whether made in or outside India, shall, subject to such
conditions as may be imposed, be taken into account, in such manner as may be specified in
computing the assets referred to in sub-section (1) and where any direction has been issued
under this proviso copies thereof shall be laid before Parliament as soon as may be after it is
issued.
(4) Where an insurer has accepted reassurance in respect of any policies of life
insurance issued by another insurer and maturing for payment in India or has ceded
reassurance to another insurer in respect of any such policies issued by himself, the sum
74
referred to in sub-section (1) shall be increased by the amount of the liability involved in
such acceptance and decreased by the amount of the liability involved in such cession.
(5) The Government securities and other approved securities in which assets are
under sub-section (1) to be invested and kept invested shall be held by the insurer free of
any encumbrance, charge, hypothecation or lien.
(6) The assets required by this section to be held invested by an insurer incorporated
or domiciled outside India shall, except to the extent of any part thereof which consists of
foreign assets held outside India, be held in India and all such assets shall be held in trust for
the discharge of the liabilities of the nature referred to in sub-section (1) and shall be vested
in trustees resident in India and approved by the Authority and the instrument of trust under
this sub-section shall be executed by the insurer with the approval of the Authority and shall
define the manner in which alone the subject-matter of the trust shall be dealt with.
Explanation.—This sub-section shall apply to an insurer incorporated in India whose
share capital to the extent of one-third is owned by, or the members of whose governing
body to the extent of one-third consists of members domiciled elsewhere than in India.
Further 27A. (1) No insurer shall invest or keep invested any part of his controlled fund
provisions otherwise than in any of the following approved investments, namely:—
regarding
investments. (a) approved securities;
(b) securities of, or guaranteed as to principal and interest by the Government of
the United Kingdom;
(c) Debentures or other securities for money issued with the permission of the
State Government by any municipality in a State;
(d) debentures or other securities for money issued by any authority constituted
under any housing or building scheme approved by the Authority or a State Government
or by any authority or body constituted by any Central Act or Act of a State Legislature;
(e) first mortgage on immovable property situated in India under any housing or
building scheme of the insurer approved by the Authority or a State Government;
(f) debentures secured by a first charge on any immovable property, plant or
equipment of any company which has paid interest in full for the five years immediately
preceding or for at least five out of the six or seven years immediately preceding on
such or similar debentures issued by it;
(g) debentures secured by a first charge on any immovable property, plant or
equipment of any company where either the book value or the market value, whichever
is less, of such property, plant or equipment is more than three times the value of such
debentures;
(h) first debentures secured by a floating charge on all in its assets of any
company which has paid dividends on its ordinary shares for the five years immediately
preceding or for at least five out of the six or seven years immediately preceding;
(i) preference shares of any company which has paid dividends on its ordinary
shares for the five years immediately preceding or for at least five out of the six or
seven years immediately preceding;
(j) preference share of any company on which dividends have been paid for the
five years immediately preceding or for at least five out of the six or seven years
immediately preceding and which have priority in payment over all the ordinary shares
of the company in winding up;
(k) shares of any company which have been guaranteed by another company,
such other company having paid dividends on its ordinary shares for the five years
immediately preceding or for at least five out of the six or seven years immediately
preceding:
75
Provided that the total amount of shares of all the companies under guarantee
by the guaranteeing company is not in excess of fifty per cent. of the paid up amount
of preference and ordinary shares of the guaranteeing company;
(l) shares of any company on which dividends of not less than four per cent.
including bonus have been paid for the seven years immediately preceding or for at
least seven out of the eight or nine years immediately preceding;
(m) first mortgages on immovable property situated in India or in any other
country where the insurer is carrying on insurance business:
Provided that the property mortagaged is not leasehold property with an
outstanding term of less than thirty years and the value of the property exceeding by
one-third, or if it consists of buildings, exceeds by one-half, the mortgaged money;
(n) immovable property situated in India or in any other country where the
insurer is carrying on insurance business:
Provided that the property is free of all encumbrances;
(o) loans on life interests, or on policies of life insurance within their surrender
valuses issued by him or by an insurer whose business he has acquired and in respect
of which business he has assumed liability;
(p) life interests;
(q) fixed deposits with banks included for the time being in the Second Schedule
2 of 1934. to the Reserve Bank of India Act, 1934 or with co-operative societies registered under
6 of 1912. the Indian Co-operative Societies Act, 1912, or under any other law for the time being
in force, the primary object of which is to finance other co-operative societies similarly
registered;
(r) debentures of, or shares in co-operative societies registered under the Indian
2 of 1912. Co-operative Societies Act, 1912, or under any other law for the time being in force;
(s) such other investment as the Authority may, by notification in the Official
Gazette, declare to be approved investments for the purposes of this section.
(2) Notwithstanding contained in sub-section (1), an insurer being a company or a co-
operative life insurance society as defined in clause (b) of sub-section (1) of section 95, may,
subject to the provisions contained in the next succeeding sub-section, invest or keep
invested any part of his controlled fund otherwise than in an approved investment, if—
(i) after such investment, the total amounts of all such investments of the insurer
do not exceed fifteen per cent. of the sum referred to in sub-section (1) of section 27,
(ii) the investment is made, or, in the case of any investment already made, the
continuance of such investments is with the consent of all the directors present at a
meeting and eligible to vote, special notice of which has beeen given to all the directors
then in India, and all such intestments, including investments in which any director is
interested, are reported with out delay to the Authority with full details of the
investments and the extent of the director's interest in any such investment.
(3) An insurer shall not out of his controlled fund invest or keep invested in the share
of any one banking company or investment company more than—
(a) two and a quarter per cent. of the sum referred to in sub-section (1) of
section 27, or
(b) two percent. of the subscribed share capital and debentures of the banking
company or investment company concerned,
whichever is less.
76
(4) An snsurer shall not out of the controlled fund invest or keep invested in the
shares or debentures of any one company other than a banking company or investment
company more than—
(a) two and a quarter per cent. of the sum referred to in sub-section (1) of
section 27, or
(b) ten per cent. of the subscribed share capital and debentures of the company,
whichever is less:
Provided that nothing in this sub-section shall apply to any investment made with the
previous consent of the Authority by an insurer, being a company with a view to forming a
subsidiary company carrying on insurance business.
(5) An insurer shall not out of his controlled fund invest or keep invested any sum in
the shares or debentures of any private limited company.
(6) Where an investment is in partly paid-up shares, the uncalled liability on such
shares shall be added to the amount invested for the purpose of computing the percentages
referred to in clause (a) of sub-section (3) and clause (a) of sub-section (4).
(7) Notwithstanding anything contained in sub-sections (3) and (4), where new
shares are issued to the existing shareholders by a company the existing shares of which are
covered by clause (i) or clause (k) or clause (l) of sub-section (1) and of which an insurer
is already a shareholder, the insurer may subscribe to such new shares:
Provided that the proportion of new shares subscribed by him does not exceed the
proportion which the paid-up amount on the shares held by him immediately before such
subscription bears to the total paid-up capital of the company at the time of such subscription.
(8) If, on an application submitted through the Authority the Authority is satisfied
that special grounds exist warranting such exemption, the Authority may for such period, to
such extent and in relation to such particular investments and subject to such conditions as
may be specified by it in this behalf, exempt an insurer from all or any of the provisions of
sub-sections (3), (4) and (7).
(9) An insurer shall not keep more than three per cent. of the controlled fund in fixed
deposit or current deposit, or partly in fixed deposit and partly in current deposit, with any
one banking company or with any one co-operative society registered under the Indian
Cooperative Societies Act, 1912, or under any other law for the time being in force and doing 2 of 1912.
banking business:
Provided that in applying this sub-section to the amount in deposit with a banking
company on any day all the premiums collected by that company on behalf of the insurer
during the preceding thirty days shall be excluded:
Provided further that the Authority may permit a co-operative life insurance society as
defined in clause (b) of sub-section (1) of section 95 to keep more than three per cent. of its
controlled fund in fixed deposit with any co-operative society referred to in this sub-section,
if the fixed deposit is secured by a first mortgage on any immovable property.
(10) All assets forming the controlled fund, not being Government securities or other
approved securities in which assets are to be invested or held invested in accordance with
section 27, shall (except for a part thereof not exceeding one-tenth of the controlled fund in
value which may, subject to such conditions and restrictions as may be prescribed, be
offered as security for any loan taken for purposes of any investment), be held free of any
encumbrance, charge, hypothecation or lien.
(11) If at any time the Authority considers any one or more of the investments
constituting an insurer's controlled fund to be unsuitable or undesirable, the Authority may,
after giving the insurer an opportunity of being heard, direct him to realise the investment or
77
investments, and the insurer shall comply with the direction within such time as may be
specified in this behalf by the Authority.
(12) Every insurer in existence at the commencement of the Insurance (Amendment)
47 of 1950. Act, 1950, whose investments or any part thereof at such commencement contravene or
contravenes any of the provisions of this section, shall, within ninety days from such
commencement, submit to the Authority a report specifying all such investments, and if the
Authority is satisfied that it will not be in the interest of the insurer or any class of insurers
generally to any such investments, it may, by order, direct that the provisions of this section
other than the provisions contained in sub-section (11) shall not apply in relation to any
such investments or to any class of investments generally for such period or periods as may
be specified in the order.
(13) Without prejudice to the powers given to the Authority by sub-section (11),
nothing contained in this section shall be deemed to require any insurer to realise any
investment made in conformity with the provisions of sub-section (1) after the commencement
of this Act which, after the making thereof, has ceased to be an approved investment within
the meaning of this section.
(14) Nothing contained in this section shall be deemed to affect in any way the manner
in which any moneys relating to the provident fund of any employee or to any security taken
from any employee or other moneys of a like nature are required to be held by or under any
Central Act, or Act of a State Legislature.
Explanation.—In this section "controlled fund" means—
(a) in the case of any insurer specified in sub-clause (a) (ii) or sub-clause (b) of
clause (9) of section 2 carrying on life insurance business—
(i) all his funds, if he carries on no other class of insurance business;
(ii) all the funds appertaining to his life insurance business if he carries on
some other class of insurance business also; and
(b) in the case of any other insurer carrying on Iife insurance business—
(i) all his funds in India, if he carries on no other class of insurance business;
(ii) all the funds in India appertaining to his life insurance business if he
carries on some other class of insurance business also;
but does not include any fund or portion thereof in respect of which the Authority is satisfied
that such fund or portion thereof, as the case may be, is regulated by the law of any country
outside India or in respect of which the Authority is satisfied that it would not be in the
interest of the insurer to apply the provisions of this section.
27B. (1) No insurer carrying on general insurance business shall, after the Further
62 of 1968. commencement of the Insurance (Amendment) Act, 1968, invest or keep invested any part of provisions
regarding
his assets otherwise than in any of the following approved investments, namely:— investments.
(a) the investments specified in clauses (a) to (e), (n), (q) and (r) of sub-section
(1) of soction 27A;
(b) debentures secured by a first charge on any immovable property, plant or
equipment of any company which has paid interest in full for the three years immediately
preceding or for at least three out of the four or five years immediately preceding on
such or similar debentures issued by it;
(c) debentures secured by a first charge on any immovable property, plant or
equipment of any company where either the book value or the market value, whichever
is less, of such property, plant or equipment is more than twice the value such
debentures;
78
(d) first debentures secured by a floating charge on all its assets or by a fixed
charge on fixed assets and floating charge on all other assets of any company which
has paid dividends on its equity shares for the three years immediately preceding or
for at least three out of the four or five years immediately preceding the date of the
investment;
(e) preference shares of any company which has paid dividends on its equity
shares for the three years immediately preceding or for at least three out of the four or
five years immediately preceding;
(f) preference shares of any company on which dividends have been paid for the
three years immediately preceding or for at least three out of the four or five years
immediatedy preceding and which have priority in payment over all the equity areas of
the company in winding up;
(g) shares of any company which have been guaranteed by another company,
such other company having paid dividends on its equity shares for the three years
immediately preceding or for atleast three out of the four or five years immediately
preceding:
Provided that the total amount of shares of all the companies under guarantee
by the guaranteeing company is not in excess of fifty per cent. of the paid-up amount
of preference and equity shares of the guaranteeing company;
(h) shares of any company on which dividends of not less than four per cent.
including bonus have been paid for the three years immediately preceding or for at
least three out of the four or five years immediately preceding;
(i) first mortgages on immovable property situated in India or in any other country
where the insurer is carring on insurance business:
Providing that the property mortgaged is not leasehold property with an
outstanding term of less than fifteen years and the value of the property exceeds by
one-third, or if it consists of buildings, exceeds, by one-half, the mortgage money;
(j) such other investments as the Authority may, by notification in the Official
Gazette, declare to be approved investments for the purposes of this section.
(2) Any prescribed assets shall, subject to such conditions, if any, as may be prescribed,
be deemed to be assets invested or kept invested in approved investment specified in sub-
section (1).
(3) Notwithstanding anything contained in sub-section (1), an insurer may, subject to
the provisions contained in the next succeeding sub-sections, invest or keep invested any
part of his assets otherwise than in an approved investment specified in sub-section (1), if—
(i) after such investment, the total amount of all such investments of the insurer
do to exceed twenty-five per cent. of his assets, and
(ii) the investment is made, or, in the case of any investment already made, the
continunace of such investment is with the consent of all the directors, other than the
directors appointed under section 34C, present at a meeting and eligible to vote,
special notice of which has been given to all the directors then in India, and all such
investments, including investments in which any director is interested, are reported
without delay to the Authority with full details of the investments and the extent of the
director's interest in any such investment:
Provided that the making, or the continuance, of such investment is not objected to by
any director appointed under section 34C.
(4) An insurer shall not invest or keep invested any part of his assets in the shares of
any one banking company or investment company more than—
(a) ten per cent. of his assets, or
79
(b) two per cent. of the subscribed share capital and debentures of the banking
company or investment company concerned,
whichever is less.
(5) An insurer shall not invest or keep invested any part of his assets in the shares or
debenturers of any one company other than a banking company or investment company
more than—
(a) ten per cent. of his assets, or
(b) ten per cent. of the subscribed share capital and debentures of the company,
whichever is less:
Provided that nothing in this sub-section shall apply to any investment made by an
insurer in the shares of any other insurer if such other insurer is a company within the
1 of 1956. meaning of section 3 of the Companies Act, 1956 and carries on insurance or re-insurance
business in India.
(6) An insurer shall not invest or keep invested any part of his assets in the shares or
debentures of any private company.
(7) Where an investment is in partly paid-up shares, the uncalled liability on such
shares shall be added to the amount invested for the purpose of computing the percentages
referred to in clause (a) of sub-section (4) and clause (a) of sub-section (5).
(8) Notwithstanding anything contained in sub-sections (4) and (5), where new shares
are issued to the existing sharedholders by a company, the existing shares of which are
covered by clause (e) or clause (g) or clause (h) of sub-section (1) and of which an insurer is
already a shareholder, the insurer may subscribe to such new shares:
Provided that the proportion of new shares subscribed by him does not exceed the
proportion which the paid-up amount on the shares held by him immediately before such
subscription bears to the total paid-up capital of the company at the time of such subscription.
(9) If, on an application submitted to the Authority is satisfied that special grounds
exist warranting such exemption, may, for such period, to such extent and in relation to such
particular investments and subject to such conditions as may be specified by it in this behalf,
exempt an insurer from all or any of the provisions of sub-sections (4), (5) and (8).
(10) An insurer shall not keep more than ten per cent. of his assets in fixed deposit or
current deposit, or partly in fixed deposit and partly in current deposit, with any one banking
company or with any co-operative society registered under the Co-operative Societies Act,
2 of 1912. 1912, or under any other law for the time being in force and doing banking business:
Provided that in applying this sub-section to the amount in deposit with a banking
company on any day, all the premiums crediting during the preceding sixty days, to the
account of the insurer with such banking company and the amounts deposited, during the
preceding thirty days, by such insurer with that banking company for payment of claims or
out of re-insurance, recoveries, shall be excluded.
(11) All assets shall (except for a part thereof not exceeding one-tenth of the total
assets in value which may subject to such conditions and restrictions as may be prescribed,
be offered as security for any loan taken for purposes of any investment or for payment of
claims, or which may be kept as security deposit with the banks for acceptance of policies) be
held free of any encumbrance, charge, hypothecation or lien.
(12) If at any time the Authority considers any one or more of the investments
constituting an insurer's assets to be unsuitable or undesirable, it may, after giving the
insurer an opportunity of being heard, direct the insurer to realise the investment or
investments, and the insurer shall comply with the direction within such time as may be
specified in this behalf by the Authority.
80
(13) Every insurer in existence at the commencement of the Insurance (Amendment)

Act, 1968, whose investments or any part thereof at such commencement do or does not 62 of 1968.
fulfil the requirements of this section, shall, within ninety days from such commencement,
submit to the Authority a report specifying all such investments, and, if the Authority is
satisfied that it will not be in the interest of the insurer or any class of insurers generally to
realise any such investments it may, by order, direct that the provisions of this section, other
than the provisions contained in sub-section (12), shall not apply in relation to any such
investments or to any class of investments generally for such period or periods as may be
specified in the order.
(14) Without prejudice to the powers conferred on the Authority by sub-section (12),
nothing contained in this section shall be deemed to require any insurer to realise any
investment made in conformity with the provisions of sub-section (1) after the commencement
of the Insurance (Amendment) Act, 1968, which, after the making thereof, has ceased to be 62 of 1968.
an approved investment within the meaning of this section.
(15) Nothing contained in this section shall be deemed to affect in any way the manner
in which any moneys relating to the provident fund of any employee or to any security taken
from any employee or other moneys of a like nature are required to be held by or under any
Central, Provincial or State Act.
(16) In this section, unless the context otherwise requires, "assets" means—
(a) in the case of an insurer carrying on life insurance business in India, all his
assets to be shown under the column "Other Classes of Business" in the balance-
sheet in Form A, in Part II of the First Schedule, but excluding any times against the
head "Other Accounts (to be specified)".
(b) in the case of an insurer specified in sub-clauses (a) (ii) or sub-clause (b) of
clause (9) of section 2, who is not carrying on life insurance business in India, all his
assets required to be shown in the balance-sheet in Form A, in Part II of the First
Schedule but excluding any items against the head "Other Accounts (to be specified)";
(c) in the case of an other insurer, the assets required to be shown in the
statement in Form AA, in Part II of the First Schedule, but excluding office furniture,
but does not include any assets specifically held against any funds or portion thereof in
respect of which the Authority is satisfied that such fund or portion thereof, as the case may
be, is regulated by the law of any country outside India or in respect of which the Authority
is satisfied that it would not be in the interest of the insurer to apply the provisions of this
section.
Prohibition 27C. No insurer shall directly or indirectly invest outside India the funds of the
for policy holders.
Investment
of funds
outside India.
Manner and 27D. (1) Without prejudice to anything contained in sections 27, 27A and 27B, the
conditions of Authority may, in the interests of the policy-holders, specify by the regulations made by it,
Investment.
the time, manner and other conditions of Investment of assets to be held by an insurer for the
purposes of this Act.
(2) The Authority may give specific directions for the time, manner and other conditions
subject to which the funds of policy holders shall be invested in the infrastructure and social
sector as may be specified by regulations made by the Authority and such regulations shall
uniformly to all the insurers carrying on the business of life insurance, general insurance, or
re-insurance in India on or after the commencement of the Insurance Regulatory and
Development Authority Act, 1999. 41 of 1999.
81
(3) The Authority may, after taking into account the nature of business and to protect
the interest of the policy holders, issue to an insurer to directions relating to the time, manner
and other conditions of Investment of assets to be held by him:
Provided that no direction under this sub-section shall be issued unless the insurer
concerned has been given a reasonable opportunity of being heard.
28. (1) Every insurer carrying on the business of life insurance shall every year, within Statement of
thirty-one days from the beginning of the year, submit to the Authority return showing as at investment of
assets.
the 31st day of December of the preceding year the assets held invested in accordance with
section 27, and all other particulars necessary to establish that the requirements of that
section have been complied with, and such return shall be certified by a principal officer of
the insurer.
(2) Every such insurer shall also furnish, within fifteen days from the last day of
March, June and September, a return certified as aforesaid showing as at the end of each of
each of said months the assets held invested accordance with section 27.
(2A) In respect of the Government securities and other approved securities invested
and kept invested in accordance with sub-section (1) of section 27 an insurer shall submit
along with the returns referred to in sub-sections (1) and (2) a certificate, where such assets
are in the custody of a banking company, from that company, and in any other case, from the
chairman, two directors and a principal officer, if the insurer is comany, or otherwise from a
principal officer of the insurer, to the effect that the securities are held free of any encumbrance,
charge, hypothecation, or lien, and every such certificate after the first shall also state that
since the date of the certificate immediately proceding all the securities have been so held.
(2B) In respect of the assets forming the controlled fund within the meaning of section
27A, and which do not from part of the Government securities and approved securities
invested and kept invested in accordance with section 27, an insurer shall submit, along with
the returns referred to in sub-sections (1) and (2), a statement, where such assets are in the
custody of a banking company, from that company, and, in any other case, from the chairman,
two directors and a principal officer if the insurer is a company, or from a principal officer of
the insurer if the insurer is not a company, specifying the assets, which are subjected to a
charge and certifying that the other assets are held free of any encumbrance, charge,
hypothecation, or lien, and every such statement after the first shall also specify the charges
created in respect of any of those assets since the date of the statement immediately preceding,
and, if any such charges have been liquidated, the date on which they were so liquidated.
(3) The Authority may at his discretion require any insurer to whom sub-section (1)
applies to submit before the 1st day of August in each or any year a return of the nature
referred to in sub-section (1), certified as required by that sub-section and prepared as at the
30th day of June.
(4) In the case of an insurer having his principal place of business or domicile outside
India the Authority may, on application made by the insurer, extend the periods of fifteen and
thirty-one days mentioned in the foregoing sub-sections to thirty days and sixty days,
respectively.
(5) The Authority shall be entitled at any time to take such steps as it may consider
necessary for the inspection or verification of the assets invested in compliance with section
27 or for the purpose of securing the particulars necessary to establish that the requirements
of the section have been complied with. The insurer shall comply with any requisition made
in this behalf by the Authority and if he fails to do so within two months from the receipt of
the requisition he shall be deemed to have made default in complying with the requirements
of this section.
82
Return of 28A. (1) Every insurer carrying on life insurance business, shall every year within
investments thirty-one days from the beginning of the year submit to the Authority a return in the from
relating to
controlled specified by the regulations made by the Authority showing as at the 31st day of March of
fund and the preceding year, the investments made out of the controlled fund referred to in section
changes 27A, and every such return shall be certified by a principal officer of the insurer.
therein.
(2) Every insurer referred to in sub-section (1) shall also submit to the Authority a
return in the form specified by the regulations made by the Authotiry showing all the changes
that occurred in the investments aforesaid during each of the quarters ending on the last day
of March, June, September and December within thirty-one day from the close of the quarter
to which it relates, and every such return shall be certified by a principal office of the insurer.
Return of 28B. (1) Every insurer carrying on general insurance business, shall, every year, within
investments
thirty-one days from the beginning of the year, submit to the Authority a return in the form
relating to
the assets and specified by the regulations made by the Authority showing as at the 31st day of March of
changes the preceding year the investments made out of his assets referred to in section 27B, and
therein.
every such return shall be certified by a principal officer of the insurer.
(2) Every insurer referred to in sub-section (1) shall also submit to the Authority a
return in the form specified by the regulations made by the Authority showing all the changes
that occurred in the Investments aforesaid during each of the quarters ending on the last day
of March, June, September and December within thirty-one days from the close of the
quarter to which it relates, and every such return shall be certified by a principal officer of the
insurer.
(3) Every insurer shall submit, along with the returns referred to in sub-sections (1)
and (2), a statement, where any part of the assets are in the custody of a banking company,
from that company, and in any other case, from the chairman, two directors and a principal
officer, if the insurer is a company, or from a principal officer of he insurer, if the insurer is not
a company, specifying the assets, which are subject to a charge and certifying that the other
assets are held free of any encumbrance, charge, hypothecation or lien, and every scuh
statement after the first shall also specify the charges created in respect of any of those
assets since the date of the statement immediately preceding, and, if any such charges have
been liquidated, the date on which they were so liquidated.
Prohibition 29. (1) No insurer shall grant loans or temporary advances either on hypothecation of
of loans. property or on personal security or otherwise, except loans on life policies issued by him
within their surrender value, to any director, manager, managing agent, actuary, aduitor or
officer of the insurer if a company, or where the insurer is a firm, to any partner therein, or to
any other company or firm in which any such director, manager, managing agent, actuary,
officer or partner holds the position of a director, manager, managing agent, actuary, officer
or partner:
Provided that nothing contained in this sub-section shall apply to loans made by an
insurer to a banking company:
Provided further that nothing in this section shall prohibit a company from granting
such loans or advances to a subsidiary company or to any other company of which the
company granting the loan or advance is a subsidiary company and where any such loan or
advance is made out of any life insurance fund the matter shall be reported within thirty days
of the making of such loan or advance to the Authority.
(2) The provisions of section 96D of the Indian Companies Act, 1913 shall not apply to 7 of 1913.
a loan granted to a director of an insurer being a company, if the loan is one granted on the
security of a policy on which the insurer bears the risk and the policy was issued to the
director on his own life, and the loan is within the surrender value of the policy.
83
(3) Subject to the provisions of sub-section (1), no insurer carrying on life insurance
business shall grant—
(a) any loans or temporary advances either on hypothecation of property or on
personal security or otherwise, except such loan as are specified in sub-section (1) of
section 27A;
(b) temporary advances to any chief, special or insurance agent to facilitate the
carrying out of his functions as such except in cases where such advances do not
exceed in the aggregate—
(i) in the case of a chief agent, the over-riding renewal commission earned
by him during the year immediately preceding;
(ii) in the case of a special agent, the renewal commission earned by him
during the year immediately preceding;
(iii) in the case of an insurance agent, the renewal commission earned by
him during the year immediately preceding;
Explanation.—The temporary advance referred to in clause (b) of this sub-section
shall also be admissible in the case of any special agent or insurance agent newly appointed,
but such advance—
(a) shall be repayable within two years from the date on which such special
agent or insurance agent was first appointed, and
(b) shall not exceed, in the case of the special agent, five hundred rupees, and in
the case of the insurance agent, one hundred rupees, and the total amount of all
advances so made shall not exceed ten thousand rupees in the case of any insurer
whose business in force is one crore of rupees or more and five thousand rupees in
any other case.
(4) Every loan or advance existing at the commencement of the Insurance (Amendment)
47 of 1950. Act, 1950 which contravenes the provision of sub-section (3) shall be notified by the insurer
to the Authority within thirty days of such commencement and shall, notwithstanding any
contract to the contrary be repaid within one year from such commencement.
(5) Where any event occurs giving rise to circumstances, the existence of which at the
time of the grant of any subsisting loan or advance would have made such grant a
contravention of this section, such loan or advance shall, notwithstanding anything in any
contract to the contrary, be repaid within three months from the occurrence of such event.
(6) In case of default in complying with the provisions of sub-section (4) or sub-
section (5), the director, manager, auditor, actuary, officer or partner, or the chief, special or
insurance agent concerned shall, without prejudice to any other penalty which he may incur,
cease to hold office under, or to act for, the insurer granting the loan on the expiry of the said
period of one year or three months, as the case may be.
30. If by reason of a contravention of any of the provisions of section 27, section 27A Liability of
directors,
section 27B or section 29, any loss is sustained by the insurer or by the policy holders, every
etc., for loss
director, manager, managing agent, officer or partner who is knowingly a party to such due to
contravention shall, without prejudice to any other penalty to which he may be liable under contravention
this Act, be jointly and severally liable to make good the amount of such loss. of sections
27, 27A, 27B
and 29.
31. (1) None of the assets in India of any insurer shall, except in the case of deposits Assets of
made with the Reserve Bank of India under section 7 or section 98 or in so far as assets are insurer how
required to be vested in trustees by sub-section (4) of section 27, be kept otherwise than in to be kept.
the name of a public officer approved by the Authority or in the corporate name of the
undertaking, if a company, or in the name of the partners, if a firm, or in the name of the
proprietor, if an individual.
* * * * *
84
Provisions 31A. (1) Notwithstanding anything to the contrary contained in the Indian Companies
relating to Act, 1913, or in the articles of association of the insurer, if a company, or in any contract or 7 of 1913.
managers,
etc. agreement, no insurer shall after expiry of one year from the commencement of the Insurance
(Amendment) Act, 1950,— 47 of 1950.
* * * * *
(c) be directed or managed by, or employ as manager or officer or in any capacity,
any person whose remuneration or any part thereof takes the form of commission or
bonus in respect of the general insurance business of the insurer:
Provided that nothing in this sub-section shall be deemed to prohibit—
(i) the payment of commission to a chief agent, special agent or an insurance
agent, in respect of life insurance business procured by or through him;
(ii) the payment of commission to a principal agent or an insurance agent in
respect of general insurance business procured by or through him;
(iii) the payment of commission, with the approval of the Central Government
and for such period as it may determine, to a person not being an officer of an insurer
who was, on the 1st day of November, 1944, employing on behalf of an insurer, chief
agents or special agents and continues so to do in respect of insurance business
procured by or through him;
* * * * *
(3) If in the case of any insurance company provision is made by the articles of
association of the company or by an agreement entered into between any person and the
company for empowering a director or manager or other officer of the company to assign his
office to any other person, any assignment of office made in pursuance of the said provision,
shall, notwithstanding anythings, to the contary contained in the said provision or in
section 86B of the Indian Companies Act, 1913 be void. 7 of 1913.
* * * * *
Power to 31B. (1) The Authority may if it is satisfied that any insurce, in the case of an insurer
restrict specifiede in sub-clause (a) (ii) or sub-clause (b) of clause (9) of section 2 in respect of all
payment of
excessive insurance business transacted by him, and in the case of any other insurer in respect of the
remuneration. insurance business transacted by him in India, is paying any person remuneration, whether
by way of commission or otherwise, on a scale disproportionate, according to the normal
standards prevailing in insurance business, to the resources of the insure, call upon the
insurer to comply within six months with such directions as it may think fit to issue in the
matter, and if compliance with the directions so issued requires the alteration of any of the
terms of the contract entered into by the insurer with such person no compensation shall be
payable to such person by the insurer by reason only of such alteration or of the resignation
of such person if the altered terms are not acceptable to him and no payment by way of
renewal comission or otherwise shall be made to such person by the insurer in respect of any
premiums paid after the date of such resignation except at such rate as may be approved by
the Authority in this behalf.
(2) Every insurer shall, before the close of the month following every year, submit to
the Authority a statement, in the form specified by the regulations made by the Authority
showing the remuneration paid, whether by way of commission or otherwise, to any person
in cases where such remuneration exceeds such sum as may be specified by the reguations
made by the Authority.
(3) Where any person not being a chief agent, principal agent or special agent is in
receipt of remuneration exceeding the sum of five thousand rupees in any year, the Authority
may, by notice in writing, require the insurer to submit certified copies of the agreement
entered into between the insurer and any such person, and in the insurer shall comply with
any such requisition within the time specified in the notice.
85
(4) Every direction under this section shall be issued by an order made by the Authority:
Provided that no order under this section shall be made unless the person concerned
has been given an opportunity of being heard.
32. (1) No insurer shall, after the commencement of this Act, appoint a managing agent
for the conduct of his business.
(2) Where any insurer engaged in the business of insurance before the commencement Limitation on
of this Act employ us a managing agent for the coduct of his business, them, notwithstanding employment
of managing
7 of 1913. anything to the contrary contained in the Indian Companies Act, 1913, and notwithstanding
agents and on
anything to the contrary contained in the articles of the insurer, if a company, or in any the
agreement entered into by the insurer, such managing agent shall cease to hold office on the remuneration
expiry of three years from the commencement of this Act and no compensation shall be payable to
them.
payable to him by the insurer by reason only of the premature termination of his employment
as managing agent.
(3) After the commencement of this Act, notwithstanding anything contained in the
7 of 1913. Indian Companies Act, 1913, and notwithstanding anything to the contrary contained in any
agreement entered into by an insurer or in the articles of association of an insurer being a
company, no insurer shall pay to a managing agent and no managing agent shall accept from
an insurer as remuneration for his services as managing agent more than two thousand
rupees per month in all, including salary and commission and other remuneration payable to
and receivable by him, for his services as managing agent.
32A. (1) A managing director or other officer of an insurer specified in sub-clause (b) of Prohibition
clause (9) of section 2 and carrying on life insurance business shall not be a managing of common
officers and
director or other officer of any other insurer carrying on life insurance business or of a
requirement
banking company or of an investment company: as to whole-
Provided that the Authority may permit such managing director or other officer to be a time officers.
managing director or other officer of any other insurer carrying on life insurance business for
the prupose of amalgamating the business of the two insurers or transferring the business of
one insurer to the other.
(2) Where an insurer specified in sub-clause (b) of clause (9) of section 2 has, life
insurance fund or more than twenty-five lakhs of rupees or insurance funds totalling more
than fifty lakhs of rupees, the manager, managing director or other officer of the insurer shall
be a whole-time employee of this insurer:
Provided that the Authority may, for such period as it thinks it, permit the employment
of any specified person as a part-time manager, managing director or other officer of such insure.
(3) Nothing in this section shall prevent—
(a) the manager, managing director or other officer of an insurer being the
manager, managing director or other officer of a subsidiary company of the insurer
with the previous approval of the Authority;
(b) the manager, managing director or other officer of an insurer exclusively
carrying on life insurance business being the manager, managing director or to her
officer of an insurer not carrying on life insurance business:
(c) any office, of a branch of one insurer carrying on general insurance business
from being any officer a branch in the same town of another insurer carrying on
general insurances business.
(d) an officer in the employment of an insurer from giving professional advice.
Explanatnion.—In this section the expression "officer" does not include a director.
32B. Every insurer shall, after the commencement of the Insurance Regulatory and Insurance
41 of 1999. Development Authority Act, 1999, undertake such percentages of life insurance business business in
and general insurance business in the rural or social sector as may by specified, in the rural or social
sector.
Official Gazette by the Authority, in this behalf.
86
* * * * *
Investigation
Power of 33. (1) The Authority may, at any time, by order in writing, direct any person (hereafter
investigation
in this section referred to as "Investigating Authority") specified in the order to investigate
and
inspection by the affairs of any insurer and to report to the Authority on any investigation made by such
Authority. Investigating Authority:
Provided that the Investigation Authority may, wherever necessary, employ any auditor
or actuary or both for the purpose of assisting him in any investigation under this section.
(2) Notwithstanding anything to the contrary contained in section 235 of the Companies
Act, 1956, the Investigating may, at any time, and shall, on being directed so to do by the 1 of 1956.
Authority, cause an inspection to be made by one or more of his officers books of account;
of any insurer and his and the Investigating Authority shall supply to the insurer a copy of
his report on such inspection.
(3) It shall be the duty of every manager, managing director or other officer of the
insurer to produce before the Investigating Authority directed to make the investigation
under sub-section (1), or inspection under sub-section (2), all such books of account, registers
and other documents in his custody or power and to furnish him with any statement and
information relating to the affairs of the insurer as the said Investigating Authority may
require of him within such time as the said Investigating Authority may specify.
(4) Any Investigating Authority, directed to make an investigation under sub-section (1),
or inspection under sub-section (2), may examine on oath, any manager, managing director
or other officer of the insurer in relation to his business and may administer oaths accordingly.
(5) The Investigating Authority shall, if he has been directed by the Authority may to
cause an inspection to be made, and may, in any other case, report to the Authority on any
inspection made under this section.
(6) On receipt of any report under sub-section (1) or sub-section (5), the Authority
may, after giving such opportunity to the insurer to make a representation in connection with
the report as, in the opinion of the Authority, seems reasonable, by order in writing,—
(a) require the insurer, to take in such action respect of any matter arising out of
the report as the Authority may think fit; or
(b) cancel the registration of the insurer; or
(c) direct any person to apply to the court for the winding up of the insurer, if a
company, whether the registration of the insurer has been cancelled under clause (b)
or not.
(7) The Authority may, after giving reasonable notice to the insurer, publish the report
submitted by the Investigating Authority under sub-section (5) or such portion thereof as
may appear to it to be necessary.
(8) The Authority may by the regulations made by it specify the minimum information
to be maintained by insurers in their books, the manner in which such information shall be
maintained, the checks an other varifications to be adopted by insurers in that connection
and all other matters incidental thereto as are, in its opinion, necessary to neable the
Investigating Authority to discharge satisfactorily his functions under this section.
Explanation.—For the purposes of this section, expression "insurer" shall include in
the case of an insurer incorporated in India—
(a) all its subsidiaries formed for the purpose of carrying on the business of
insurance exclusively outside India; and
(b) all its branches whether situated in India or outside India.
87
(9) No order made under this section other than an order made under clause (b) of
sub-section (6) shall be capable of being called in question in any court.
(10) All expenses of, and incidental to, any investigation made under this section shall
be defrayed by the insurer, shall have priority over that debts due from the insurer and shall
be recoverable as an arrear of land revenue.
* * * * *
34B. (1) * * * * * Power of
Authority to
(4) If any person in respect of whom an order is made by the Authority under remove
sub-section (1) or under the proviso to sub-section (2) contravenes the provisions of this managerial
persons from
section, he shall be punishable with fine which may extend to two hundred and fifty rupees office.
for each day during which such contravention continues.
* * * * *
34C. (1) If the Authority is of opinion that in the public interest or in the interest of an Power of
insurer, or his policy holders it is necessary so to do, it may, from time to time, by order in Authority to
appoint
writing, appoint, with effect from such date as may be specified in the order, one or more additional
persons to hold office as additional directors of the insurer: director.
Provided that the number of additional directors so appointed shall not, at any time,
exceed five or one-third of the maximum strength fixed for the Board by the articles of
association of the insurer, whichever is less.
* * * * *
34G. Without prejudice to the generality of the powers conferred by sub-section (1) of Power of
section 34, the Authority may, if it has reasons to believe that the working of any branch Authority to
under closure
outside India of an insurer being an insurer specified in sub-clause (b) of clause (9) of of foreign
section 2, is generally resulting in a loss or that the affairs of that branch are being conducted branches.
in a manner prejudicial to the interests of the policy holders or the public interest, it may, after
giving an opportunity to the insurer of being heard, direct that the insurer shall cease, within
such period, not being less tyhan one year, as may be specified in the order, to carry on
insurance business in the country in which such branch is situated and if the insurer fails to
comply with such order he shall be deemed to have failed to comply with the provisions of
this Act.
34H. (1) Where the Chairperson of the Authority in consequence of information in his seizure Search
possession, has reason to believe that— and
(a) any person who has been required under sub-section (2) of section 33 to
produce, or cause to be produced, any books, accounts or other documents in his
custody or power has omitted or failed to produce, or cause to be produced, such
books, accounts or other documents, or
(b) any person to whom a requisition to produce any books, accounts or other
documents as aforesaid has been or might be issued will not, or would not, produce or
cause to be produced, any books, accounts or other documents which will be useful
for, or relevant to, an investigation under sub-section (1) of section 33 or an inspection
under sub-section (1A) of that section, or
(c) a contravention of any provision of this Act has been committed or is likely
to be committed by an insurer, or
(d) any claim which is due to be settled by an insurer, has been or is likely to be
rejected or settled at a figure higher than a reasonable amount, or
(e) any claim which is due to be settled by an insurer, has been or is likely to be
rejected or settled at a figure lower than a reasonable amount, or
88
(f) any illegal rebate or commission has been paid or is likely to be paid by an
insurer, or
(g) any books, accounts receipts, vouchers, survey reports or other documents,
belonging to an insurer are likely to be tampered with, falsified or manufactured, he
may authorise any subordinate officer of his, not lower in rank than an officer authorised
by the Authority (hereafter referred to as the authorised officer) to—
(i) enter and search any building or place where he has reason to suspect
that such books, accounts or other documents, or any books or papers relating
to any claim, rebate or commission or any receipts, vouchers, reports or other
documents are kept;
(ii) break open the lock of any door, box, locker, safe, almirah or other
receptacle for exercising the powers conferred by clause (i) where the keys
thereof are not available;
(iii) seize all or any such books, accounts or other documents, found as a
result of such search;
(iv) place marks of identification on such books, accounts or other
documents or make or cause to be made extracts or copies therefrom.
* * * * *
(7) If a person legally entitled to the books, accounts, papers, receipts, vouchers,
reports or other documents seized under sub-section (1) objects for any reason to the
approval given by the Chairperson of the Authority under sub-section (5), he may make an
application to the Central Government stating therein the reason for such objection and
requesting for the return of the books, accounts, papers, receipts, vouchers, reports or other
documents.
(8) On receipt of the application under sub-section (7), the Central Government may,
after giving the applicant an opportunity of being heard, pass such orders as it thinks fit.
* * * * *
Amalgamation and Transfer of Insurance Business
Amalgamation 35. (1) No life insurance business of an insurer specified in sub-clause (a) (ii) or sub-
and transfer of
insurance
clause (b) of clause (9) of section 2 shall be transferred to any person or transferred to or
business. amalgamated with the life insurance business of any other insurer except in accordance with
a scheme prepared under this section and approved by the Authority.
* * * * *
(3) Before an application is made to the Authority to approve any such scheme notices
of the intention to make the application together with a statement of the nature of the
amalgamation or transfer, as the case may be, and of the reason therefor shall, at least two
months before the application is made, be sent to the Authority and certified copies, four in
number, of each of the following documents shall be furnished to the Authority, and other
such copies shall during the two months aforesaid be kept open for the inspection of the
members and policy holders at the principal and branch officers and chief agencies of the
insurers concerned, namely:—
* * * * *
(b) balance-sheets in respect of the insurance business of each of the insurers
concerned in such amalgamation or transfer, prepared in the form set forth in Part II of
the First Schedule and in accordance with the regulations contained in Part I of the
Schedule;
(c) actuarial reports and abstracts in respect of the life insurance business of
each of the insurers so concerned, prepared in conformity with the requirements of
Part II of the Fourth and Fifth Schedules and in accordance with the regulations
contained in Part I of the Schedule concerned;
* * * * *
89
36. (1) When any application such as is referred to in sub-section (3) of section 35 is Sanction of
amalgamation
made to the Authority, the Authority shall cause, if for special reasons it so directs, notice of
and transfer
the application to be sent to every person resident in India who is the holder of a life policy by Authority.
of any insurer concerned and shall cause a statement of the nature and terms of the
amalgamation or transfer, as the case may be, to be published in such manner and for such
period as it may direct, and, after hearing the directors and such policy holders as apply to be
heard and any other persons whom it considers entitled to be heard, may approve the
arrangement, it is satisfied that no sufficient objection to the arrangement has been established
and shall make such consequential orders as are necessary to give effect to the arrangement,
including orders as to the disposal of any deposit made under section 7 or section 98.
Provided that—
(a) no part of the deposit made by any party to the amalgamation or transfer shall
be returned except where, after effect is given to the arrangement, the whole of the
deposit to be made by the insurer carrying on the amalgamated business or the person
to whom the business is transferred is completed,
(b) only so much shall be returned as is no longer required to complete the
deposit last mentioned in clause (a), and
(c) while the deposit last mentioned in clause (a) remains incomplete no accession,
resulting from the arrangement, to the amount already deposited by the insurer carrying
on the amalgamated business or the person to whom the business is transferred shall
be appropriated as payment or part payment of any instalment of deposit subsequently
due from him under section 7 or section 98.
(2) If the arrangement involves a reduction of the amount of the insurance and other
contrancts of the transfer or insurer or of any or all of the insurers concerned in the
amalgamation, the Authority may approve the arrangement reducing the amount of such
contracts upon such terms and subject to such conditions as he may think proper, and the
reduction of contracts as approved by the Authority shall be valid and binding on all the
parties concerned.
* * * * *
37A. (1) * * * * * Power of
Authority to
(4) The scheme shall thereafter be placed before the Central Government for its sanction prepare
and the Central Government may sanction the scheme without any modification or with such scheme of
modifications as it may consider necessary; and the scheme as sanctioned by the Central amalgamation.
Government shall come into force on such date as the Central Government may specify in
this behalf:
Provided that different dates may be specified for different provisions of the scheme.
* * * * *
Assignment or transfer or policies and nominations
38. (1) A transfer or assignment of a policy of life insurance, whether with or without Assignment
consideration may be made only by an endorsement upon the policy itself or by a separate and transfer of
insurance
instrument, signed in either case by the transferor or by the assignor, his duly authorised policies.
agent and attested by at least one witness, specifically setting forth the fact of transfer or
assignment.
(2) The transfer or assignment shall be complete and effectual upon the execution of
such endorsement or instrument duly attested but except where the transfer or assignment is
in favour of the insurer shall not be operative as against an insurer and shall not confer upon
the transferee or assignee, or his legal representative, and right to sue for the amount of such
policy or the moneys secured thereby until a notice in writing of the transfer or assignment
and either the said endorsement or instrument itself of a copy thereof certified to be correct
90
by both transferor and transferee or their duly authorised agents have been delivered to the
insurer:
Provided that where the insurer maintains one or more places of business in India,
such notice shall be delivered only at the place in India mentioned in the policy for the
purpose or at his principal place of business in India.
(3) The date on which the notice referred to in sub-section (2) is delivered to the
insurer shall regulate the priority of all claims under a transfer or assignment as between
persons interested in the policy, and where there is more than one instrument of transfer or
assignment the priority of the claims under such instruments shall be governed by the order
in which the notices referred to in sub-section (2) are delivered.
(4) Upon the receipt of the notice referred to in sub-section (2), the insurer shall record
the fact of such transfer or assignment together with the date thereof and the name of the
transferee or the assignee and shall, on the request of the person by whom the notice was
given, or of the transferee or assignee, on payment of a fee not exceeding one rupee, grant a
written acknowledgement of the receipt of such notice; and any such acknowledgement
shall be conclusive evidence against the insurer that he has duly received the notice to
which such acknowledgement relates.
(5) Subject to the terms and conditions of the transfer or assignment, the insurer shall,
from the date of receipt of the notice referred to in sub-section (2) recognise the transferee or
assignee named in the notice as the only person entitled to benefit under the policy, and
such person shall be subject to all liabilities and equities to which the transferor or assignor
was subject at the date of the transfer or assignment and may institute any proceedings in
relation to the policy without obtaining the consent of the transferor or assignor or making
him a party to such proceedings.
(6) Any rights and remedies of an assignee or transferee of a policy of life insurance
under an assignment or transfer effected prior to the commencement of this Act shall not be
affected by the provisions of the section.
(7) Notwithstanding any law or custom having the force of law to the contrary, an
assignment in favour of a person made with the condition that it shall be inoperative or that
the interest shall pass to some other person on the happening of a specified event during the
lifetime of the person whose life is insured, and an assignment in favour of the survivor or
survivors of a number of persons, shall be valid.
Nomination 39. (1) The holder of a policy of life insurance on his own life may, when effecting the
by policy-
policy or at any time before the policy matures for payment, nominate the person or persons
holder.
to whom the money secured by the policy shall be paid in the event of his death:
Provided that, where any nominee is a minor, it shall be lawful for the policy holder to
appoint in the prescribed manner any person to receive the money secured by the policy in
the event of his death during the minority of the nominee.
(2) Any such nomination in order to be effectual shall, unless it is incorporated in the
text of the policy itself, be made by an endorsement on the policy communicated to the
insurer and registered by him in the records relating to the policy and any such nomination
may at any time before the policy matures for payment be cancelled or changed by an
endorsement or a further endorsement or a will, as the case may be, but unless notice in
writing of any such cancellation or change has been delivered to the insurer, the insurer shall
not be liable for any payment under the policy made bona fide by him to a nominee mentioned
in the text of the policy or registered in records of the insurer.
(3) The insurer shall furnish to the policy holder a written acknowledgement of having
registered a nomination or cancellation or change thereof, and may charge a fee not exceeding
one rupee for registering such cancellation or change.
91
(4) A transfer or assignment of a policy made in accordance with section 38 shall

automatically cancel a nomination;
Provided that the assignment, of a policy to the insurer who bears the risk on the
policy at the time of the assignment, in consideration of a loan granted by that insurer on the
security of the policy within its surrender value, or its reassignment on repayment of the loan
shall not cancel a nomination, but shall affect the rights of the nominee only to the extent of
the insurers' interest in the policy.
(5) Where the policy matures for payment during the lifetime of the person whose life
is insured or where the nominee or, if there are more nominees than one, all the nominees die
before the policy matures for payment, the amount secured by the policy shall be payable to
the policy-holder or his heirs or legal representatives or the holder of a succession certificate,
as the case may be.
(6) Where the nominee or, if there are more nominees than one, a nominee or nominees
survive the person whose life is insured, the amount secured by the policy shall be payable
to such survivor or survivors.
(7) The provisions of this section shall not apply to any policy of life insurance to
3 of 1874. which section 6 of the Married Women's Property Act, 1874 applies or has at any time
applied:
Provided that where a nomination made whether before or after the commencement of
6 of 1946. the Insurance (Amendment) Act, 1946, in favour of the wife of the person who has insured
his life or of his wife and children or any of them is expressed, whether or not on the face of
the policy, as being made under this section, the said section 6 shall be deemed not to apply
or not to have applied to the policy.
40. (1) No person shall, after the expiry of six months from the commencement of this Prohibition of
payment by
Act, pay or contract to pay any remuneration or reward whether by way of commission or way of
otherwise for soliciting or procuring insurance business in India to any person except an commission or
insurance agent or an intermediary or insurance intermediary. otherwise for
procuring
(1A) In this section and sections 40A, 41 and 43, reference to an insurance agent shall business.
be construed as including reference to an individual soliciting or procuring insurance business
exclusively in the territories which, immediately before the Ist November, 1956 were comprised
in a Part B State notified in this behalf by the Central Government in the Official Gazette and
holding a valid licence as insurance agent under the law of that Part B State.
(2) No insurance agent shall be paid or contract to be paid by way of Commission or as
remuneration in any form an amount exceeding, in the case of life insurance business, forty
per cent. of the first year's premium payable on any policy or policies effected through him
and five per cent. of a renewal premium, payable on such a policy or, in the case of business
of any other class, fifteen per cent, of the premium:
Provided that insurers, in respect of life insurance business only, may pay, during the
first ten years of their business to their insurance agents fifty-five per cent. of the first year's
premium payable on any policy or policies effected through them and six per cent. of the
renewal premiums payable on such policies:
Provided further that nothing in this sub-section shall apply in respect of any policy of
life insurance issued after the 31st day of December, 1950, or in respect of any policy of
47 of 1950. general insurance issued after the commencement of the Insurance (Amendment) Act, 1950.
(2A) Save as hereinafter provided, no insurance agent or intermediary or insurance
intermediary shall be paid or contract to be paid by way of commission or as remuneration in
any form any amount in respect of any policy not effected through him.
Provided that where a policy of life insurance has lapsed, and it cannot under the terms
and conditions applicable to it be revived without further medical examination of the person
92
whose life was insured thereby, an insurer, after giving by notice in writing to the insurance
agent through whom the policy was effected if such agent continues to be an agent of the
insurer an opportunity to effect the revival of the policy within a time specified in the notice,
being not less than one month from the date of the receipt by him of the notice, may pay to
another insurance agent who effects the revival of the policy an amount calculated at a rate
not exceeding half the rate of commission at which the agent through whom the policy was
effected would have been paid had the policy not lapsed, on the sum payable on revival of
the policy on account of arrear premiums (excluding any interest on such arrear premiums)
and also on the subsequent renewal premiums payable on the policy.
(3) Nothing in this section shall prevent the payment under any contract existing prior
to the 27th day of January, 1937, of gratitudes or renewal commission to any person, whether
an insurance agent within the meaning of this Act or not, or to his representatives after his
decease in respect of insurance business effected through him before the said date.
Limitation of 40A. (1) No person shall pay or contract to pay to an insurance agent, shall receive or
expenditure on contract to receive by way of commission or remuneration in any form in respect of any
commission. policy of life insurance issued in India by an insurer after the 31st day of December, 1950, and
effected through an insurance agent, an amount exceeding—
(a) where the policy grants an immediate annuity or a deferred annuity in
consideration of a single premium, or where only one premium is payable on the policy,
two per cent. of that premium.
(b) where the policy grants a deferred annuity in consideration of more than one
premium, seven and a half per cent. of the first year's premium, and two per cent. of
each renewal premium, payable on the policy, and
(c) in any other case, thirty-five per cent. of the first year's premium seven and a
half per cent. of the second and third year's renewal premium and thereafter five per
cent. of each renewal premium payable on the policy:
Provided that a case referred to in clause (c) an insurer, during the first ten years
of his business, may pay to an insurance agent, and an insurance agent may receive
from such an insurer, forty per cent. of the first year's premium payable on the policy:
Provided further that in a case referred to in clause (c), where the rate of
commission payable on the first year's premium is equal to or less than twenty-one per
cent. thereof, and the rate on the fourth and fifth years' premiums does not exceed six
per cent. thereof, the Life Insurance Corporation of India may pay to an insurance
agent, and the insurance agent may receive from it, commission on the sixth and
subsequent years' renewal premiums payable on the policy at a rate not exceeding six
per cent. of each renewal premium.
(2) No person shall pay or contract to pay to a special agent, and no special agent shall
receive or contract to receive, by way of commission or as remuneration in any form, in
respect of any policy of life insurance issued in India by an insurer after the 31st day of
December, 1950, and effected through a special agent, an amount exceeding—
(a) in a case referred to in clause (a) of sub-section (1), one half per cent. of the
premium,
(b) in a case referred to in clause (b) of sub-section (1), two per cent. of the first
year's premium payable on the policy, and
(c) in a case referred to in clause (c) of sub-section (1), fifteen per cent. of the first
year's premium payable on the policy:
Provided that in a case referred to in clause (c), an insurer, during the first ten
years of his business, may pay to a special agent, and a special agent may receive from
such an insurer, seventeen and a half per cent. of the first year's premium payable on
the policy.
93
(3) No person shall pay or contract to pay to an insurance agent, and no insurance
agent shall receive or contract to receive, by way of commission or remuneration in any form,
in respect of any policy of general insurance issued in India by an insurer after the
62 of 1968. commencement of the Insurance (Amendment) Act, 1968 and effected through an insurance
agent, an amount exceeding fifteen per cent. of the premium payable on the policy where the
policy to fire or marine insurance or miscellaneous insurance.
(4) No person shall pay or contract to pay to a principal agent, and no principal agent
shall receive or contract to receive, by way of commission or remuneration in any form, in
respect of any policy of general insurance issued in India by an insurer after the commencement
47 of 1950. of the Insurance (Amendment) Act, 1950, and effected through a principal agent an amount
exceeding—
(a) in the case referred to in clause (a) of sub-section (3), twenty per cent. of the
premium payable on the policy, and
(b) in the case referred to in clause (b) of that sub-section, fifteen per cent. of the
policy,
less any commission payable to any insurance agent in respect of the said policy:
Provided that the Authority may, in such circumstances and to such extent and
for such period as may be specified, authorise the payment of commission or
renumeration exceeding the limits specified in this sub-section to a principal agent of
an insurer incorporated or domiciled elsewhere than in India, if such agent carries out
and has continuously carried out in his own office duties on behalf of the insurer
which would otherwise have been performed by the insurer.
(5) Without prejudice to the provisions of section 102 in respect of a contravention of
any of the provisions of the preceding sub-section by an insurer, any insurance agent who
contravenes the provisions of sub-section (1) or sub-section (3) shall be punishable with
the fine which may extend to one hundred rupees.
40B. (1) Every insurer transacting life insurance business in India shall furnish to the Limitation of
Authority, within such time as may be prescribed, statements in the prescribed form certified expenses of
management in
by an actuary on the basis of premiums currently used by him in regard to new business in life insurance
respect of mortality, rate of interest, expenses and bonus loading. business.
(2) After the 31st day of December, 1950, no insurer shall, in respect of life insurance
business transacted by him in India, spend as expenses of management in any calendar year
an amount in excess of the prescribed limits and in prescribing any such limits regard shall be
had to the size and age of the insurer and the provision generally made for expenses of
management in the premium rates of insurers:
Provided that where an insurer has spent such expenses in any year an amount
in excess of the amount permissible under this sub-section, he shall not be deemed to
have contravened the provisions of this section, if the excess amount so spent is
within such limits as may be fixed in respect of the year by the Authority after consultation
with the Executive Committee of the Life Insurance Council constituted under section
64F, by which the actual expenses incurred may exceed the expenses permissible under
this sub-section.
(3) In respect of any statement mentioned in sub-section (1), the Authority may require
that it shall be submitted to another actuary appointed by the insurer for the purpose and for
certification by him, whether with or without modifications.
(4) Every insurer transacting life insurance business in India shall incorporate in the
revenue account—
(a) a certificate signed by the chairman and two directors and by the principal
officer of the insurer, and an auditor's certificate, certifying that all expenses of
management in respect of life insurance business transacted by the insurer in India
have been fully debited in the revenue account as expenses, and
94
(b) if the insurer is carrying on any other class of insurance business in addition
to life insurance business an auditor's certificate certifying that all charges incurred in
respect of his life insurance business and in respect of his business over than life
insurance business have been fully debited in the respective revenue accounts.
Explanation.—In this section,—
(a) "calendar year" or "year" means, in relation to an insurer who is required
to furnish returns in accordance with sub-section (2) of section 16, the period
covered by the revenue account furnished by such insurer under clause (b) of
that sub-section;
(b) "expenses of management" means all charges wherever incurred
whether directly or indirectly, and includes—
(i) commission payments of all kinds;
(ii) any amount of expenses capitalised;
(iii) in the case of an insurer having his principal place of business
outside India, a proper share of head office expenses which all not be less
than such percentage as may be prescribed of the total premiums (less re-
insurances) received during that year in respect of life insurance business
transacted by him in India.
but does not include in the case of an insurer having his principal place of
business in India any share of head office expenses in respect of life insurance business
transacted by him outiside India.
Limitation of 40C. (l) After the 31st day of December, 1949, no insurer shall, in respect of any class of
expenses of general insurance business transacted by him in India, spend in any calender year as expenses
management in
general
of management including commission of remuneration for procuring business an amount in
insurance excess of the prescribed limits and in prescribing any such limits regard shall be had to the
business. size and age of the insurer:
Provided that where an insurer has spent as such expenses in any year an amount in
excess of the amount permissible under this sub-section, he shall not be deemed to have
contravened the provisions of this section, if the excess amount so spent is within such
limits as may be fixed in respect of the year by the Authority after consultation with Executive
Committee of the General Insurance Council constituted under section 64F, by which the
actual expenses incurred may exceed the expenses permissible under this sub-section.
(2) Every insurer as aforesaid shall incorporate in the revenue account a certificate
signed by the chairman and two directors and by the principal officer of the insurer, and by
an auditor certifying that all expenses of management wherever incurred, whether directly or
indirectly, in respect of the business referred to in this section have been fully debited in the
revenue account as expenses.
Explanation.—In this section,—
(a) "calender year" shall have the meaning assigned to it in section 40B;
(b) "expenses of management" means all charges, wherever incurred whether
directly or indirectly, including commission payments of all kinds and, in the case of an
insurer having his principal place of business outside India, a proper share of head
office expenses, which shall not be less than such percentage as may be prescribed, of
his gross premium income (that is to say, the premium income without taking into
account premiums or re-insurance ceded or accepted) written direct in India during the
year, but in computing the expenses of management in India the following, and only
the following, expenses may be excluded, namely:—
(i) in the case of an insurer having his principal place of business in India,
a share of head office expenses in respect of general insurance business
95
transacted by him outside India not exceeding such percentage of his gross
direct premium written outside India as may be prescribed;
(ii) in the case of an insurer having his principal place of business outiside
India, a share of the expenses of his office in India in respect of general insurance
business transacted by him outside India through his office in India, not
excedding such percentage of his gross direct premium written outside India
through his office in India, as may be prescribed;
(iii) any expenses debited to profit and loss account relating exclusively
to the management of capital, and dealings with share holders and a proper
share of managerial expenses calculated in such manner as may be prescribed;
and
(iv) any expenses debited to claims in the revenue account in Form F of
Part II of the Third Schedule;
(c) "insurance business transacted in India" includes insurance business
wherever effected relating to any properly situate in India or to any vessal or aircraft
registered in India.
41. (1) * * * * * Prohibition of
rebates.
(2) Any person making default in complying with the provisions of this section shall
be punishable with fine which may extend to five hundred rupees.
42. (1) The Authority or an officer authorised by it in this behalf shall, in the manner Licensing of
determined by the regulations made by it and on payment of the fee determined by the insurance
agents.
regulations, which shall not be more than two hundred and fifty rupees, issue to any person
making an application in the manner determined by the regulations, a licence to act as an
insurance agent for the purpose of soliciting or procuring insurance business:
Provided that,—
(i) in the case of an individual, he does not suffer from any of the disqualifications
mentioned in sub-section (4); and
(ii) in the case of a compnay or firm, any of its directors or partners does not
suffer from any of the said disqualifications;
Provided further that any licence issued immediately before the commencement of the
41 of 1999. Insurance. Regulatory and Development Authority Act, 1999 shall be deemed to have been
issued in accordance with the regulations which provide for such licence.
(2) A licence issued under this section shall entitle the holder to act as an insurance
agent for any insurer.
(3) A licence issued under this section, after the date of the commencement of the
41 of 1999. Insurance Regulatory and Development Authority Act, 1999, shall remain in force for a
period of three years only from the date of issue, but shall, if the applicant, being an individual
does not, or being a company or firm any of its directors or partners does not, suffer from any
of the disqualifications mentioned in clauses (b), (c), (d), (e) (f) and (g) of sub-section (4) and
the application of renewal of licence reaches the issuing authority at least thirty days before
the date on which the licence ceases to remain in force, be renewed for a period of three years
at any one time on payment of the fee determined by the regulations made by the Authority
which shall not be more than rupees two hundred and fifty, and additional fee of an amount
determined by the rgulations not exceeding rupees one hundred by way of penalty, if the
application for renewal of the licence does not reach the issuing authority at least thirty days
before the date on which the licence ceases to remain in force.
(3A) No application for the renewal of a licence under this section shall be entertained
if the application does not reach the issuing authority before the licence ceases to remain in
force:
96
Provided that the Authority may, if satisfied that undue hardship would be caused
otherwise, accept any application in contravention of this sub-section on payment by the
applicant of a penalty of seven hundred and fifty rupees.
(4) The disqualifications above referred to shall be the following:—
(a) that the person is a minor;
(b) that he is found to be of unsound mind by a court of competent jurisdiction;
(c) that he has been found guilty of criminal misappropriation or criminal breach
of trust of cheating or forgery or an abetment of or attempt to commit any such offence
by a court of competent jurisdiction:
Provided that where at least five years have elapsed since the completion of the
sentence imposed on any person in respect of any such offence, the Authority shall
ordinarily declare in respect of such person that his conviction shall cease to operate
as a disqualification under this clause;
(d) that in the course of any judicial proceeding relating to any policy of insurance
or the winding up of an insurance company or in the course of an investigation of the
affairs of an insurer it has been found that he has been guilty of or has knowingly
participated in or connived at any fraud, dishonesty or misrepresentation against an
insurer or an insured;
(e) that in the case of an individual, he does not possess the requisite
qualifications and practical training for a period not exceeding twelve months, as may
be specified by the regulations made;
(ea) that in the case of a company or firm making an application under sub-
section (1) or sub-section (3), a director or a partner or one or more of its officers or
other employees so designated by it and in the case of any other person, the chief
executive, by whatever name called, or one or more of his employees designated by
him, do not possess the requisite qualifications and practical training and have not
passed such an examination as required under clauses (e) and (f);
(f) that he has not passed such examination as may be specified by the regulations
made by the authority in this behalf:
Provided that a person who had been issued a licence under sub-section (1) of
this section or sub-section (1) of section 64UM shall not be required to possess the
requisite qualifications, practical training and pass such examination as required by
clauses (e) and (f);
(g) that he violates the code of conduct as may be specified by the regulations
made by the Authority.
(5) If it be found that an insurance agent being an individual is, or being a company or
firm contains a director or partner who is suffering from any of the disqualifications mentioned
in sub-section (4), then, without prejudice to any other penalty to which he may be liable, the
Authority shall, and if the insurance agent has knowingly contravened any of the provisions
of this Act may, cancel the licence issued to the agent under this section.
(6) The Authority may issue a duplicate licence to replace a licence lost, destroyed or
mutilated, on payment of such fee not exceeding fifty rupees as may be determined by the
regulations.
(7) Any person who acts as an insurance agent without holding a licence issued under
this section to act as such shall be punishable with fine which may extend to five hundred
rupees, and any insurer or any person acting on behalf of an insurer, who appoints as an
insurance agent any person not licensed to act as such or transacts any insurance business
in India through any such person shall be punishable with fine which may extend to one
thousand rupees.
97
(8) Where the person contravening sub-section (7) is a company or a firm, then,
without prejudice to any other proceedings which may be taken against the company or firm,
every director, manager, secretary or other officer of the company, and every partner of the
firm who is knowingly a party to such contravention shall be punishable with fine which may
extend to five thousand rupees.
42A. (1) The Authority or an officer authorised by it in this behalf shall in the prescribed Registration of
manner and on payment of the prescribed fee which shall not be more than twenty-five principal
agents, chief
rupees for a principal agent or a chief agent and ten rupees for a special agent, register any agents and
person who makes an application to it in the prescribed manner if— special agents.
(a) in the case of an individual, he does not suffer from any of the disqualifications
mentioned in sub-section (4) of section 42, or
(b) in the case of a company or firm, any of its directors or partners does not
suffer from any of the said disqualifications,
and a certificate to act as a principal agent, chief agent or special agent, as the case may be
for the purpose of procuring insurance business shall be issued to him.
(2) A certificate issued under this section shall entitle the holder thereof to Act as a
principal agent, chief agent or special agent, as the case may be, for any insurer,
(3) A certificate issued under this section shall remain in force for a period of twelve
months only from the date of issue, but shall, on application made in this behalf, be renewed
from year to year on production of a certificate from the insurer concerned that the provisions
of clauses 2 and 3 of the Part A of the Sixth Schedule in the case of a principal agent, the
provisions of clauses 2 and 4 of Part B of the said Schedule in the case of a chief agent, and
the provisions of clauses 2 and 3 of the Part C of the said Schedule in the case of a special
agent, have been complied with, and on payment of the prescribed fee, which shall not be
more than twenty-five rupees, in the case of a principal agent or a chief agent, and ten rupees
in the case of a special agent, and an additional fee of the prescribed amount not exceeding
five rupees by way of the penalty, in cases where the application for renewal of the certificate
does not reach the issuing authority before the date on which the certificate ceases to remain
in force:
Provided that, where the applicant is an individual, he does not suffer from any of the
disqualifications mentioned in clauses (b) to (d) of sub-section (4) of section 42, and where
the applicant is a company or a firm, any of its directors or partners does not suffer from any
of the said disqualifications.
(4) Where it is found that the principal agent, chief agent or special agent being an
individual is, or being a company or firm contains a director or partner who is suffering from
any of the disqualifications mentioned in sub-section (4) of section 42, without prejudice to
any other penalty to which he may be liable, the Authority shall, and where a principal agent,
chief agent or special agent has contravened any of the provisions of this Act may, cancel
the certificate issued under this section to such principal agent, chief agent or special agent.
(5) The Authority which issued any certificate under this section may issue a duplicate
certificate to replace a certificate lost, destroyed or mutilated on payment of the prescribed
fee, which shall not be more than two rupees.
(6) Any person who acts as a principal agent, chief agent or special agent, without
holding a certificate issued under this section to act as such, shall be punishable with fine
which may extend to five hundred rupees, and any insurer or any person acting on behalf of
an insurer, who appoint as a principal agent, chief agent or special agent any person not
entitled to act as such or transacts any insurance business in India through and such
person, shall be punishable with fine which may extend to one thousand rupees.
98
every director, manager, secretary or any other officer of the company, and every partner of
the firm who is knowingly a party to such contravention shall be punishable with fine which
may extend to five hundred rupees.
(8) The provisions of sub-sections (6) and (7) shall not take effect until the expiry of
six months from the commencement of the Insurance (Amendment) Act, 1950. 47 of 1950.
(9) No insurer shall, on or after the commencement of the Insurance (Amendment) Act,
2002, appoint or transact any insurance business in India through any principal agent, chief
agent or special agent.
Regulation of 42B. (1) No insurer shall, after the expiration of seven years from the commencement of
employment of the Insurance (Amendment) Act, 1950, appoint, or transact any insurance business in India, 47 of 1950.
principal
agents.
through a principal agent.
(2) Every contract between an insurer and a principal agent shall be in writing and the
terms contained in part A of the Sixth Schedule shall be deemed to be incorporated in, and
form part of, every such contract.
(3) No insurer shall, after the commencement of the Insurance (Amendment) Act, 1950, 47 of 1950.
appoint any person as a principal agent except in a presidency town unless the appointment
is by way of renewal of any contract subsisting at such commencement.
(4) Within sixty days of the commencement of the Insurance (Amendment) Act, 1950, 47 of 1950.
every principal agent shall file with the insurer concerned a full list of insurance agents
employed by him indicating the terms of the contract between the principal agent and each
of such insurance agents, and, if any principal agent fails to file such a list within the period
specified, any commission payable to such principal agent on premiums received from the
date of expiry of the said period of sixty days until the date of the filing of the said list shall,
notwithstanding anything in any contract to the countrary, cease to be so payable.
(5) A certified copy of every contract as is referred to in sub-section (2) shall be
furnished by the insurer to the Authority within thirty days of his entering into such contract,
and intimation of any change in any such contract shall be furnished by the insurer with full
particulars thereof to the Authority within thirty days of the making of any such change.
(6) If the commission due to any insurance agent in respect of any general insurance
business procurred by such agent is not paid by the principal agent for any reason, the
insurer may pay the insurance agent the commission so due and recover the amount so paid
from the principal agent concerned.
(7) Every contract as is referred to in sub-section (2), subsisting at commencement of
the Insurance (Amendment) Act, 1950 shall, with respect to terms regarding remuneration, be 47 of 1950.
deemed to have been so altered as to be in accordance with the provisions of sub-section (4)
of section 40A.
(8) If any dispute arises as to whether a person is or was a principal agent, the matter
shall be referred to the Authority, whose decision shall be final.
(9) Every insurer shall maintain a register in which the name and address of every
principal agent appointed by him, the date of such appointment and the date, if any, on which
the appointment ceased shall be entered.
Regulation of 42C. (1) Every contract between an insurer carrying on life insurance business and a
employment of chief agent shall be in writing, and shall specify the area (not being less in extent than a
chief agents
and special
district or the equivalent thereof) for which the chief agent is appointed, and the terms
agents. contained in Part B of the Sixth Schedule shall be deemed to be incorporated in, and form part
of every such contract.
(2) No chief agent shall, either directly or through insurance agents or special agents
employed by or through him procure life insurance business for the insurer in any area
outside the area for which he has been appointed or in any area for which another chief agent
99
has been appointed or in any area in which the head office or any branch office of the insurer
is operating and, neither the head office or any branch office of the insurer shall operate in
any area for which a chief agent has been apointed:
Provided that nothing in this sub-section shall be deemed to prohibit the head office of
an insurer which had been operating at the commencement of the Insurance (Amendment)
47 of 1950. Act, 1950 for a period of not less than ten years before such commencement within the
municipal limits of any town where the head office is situate, and a chief agent who, in
pursuance of an agreement in writing, had been operating for a similar period within such
limits, from continuing to operate within the said limits:
Provided further that nothing in this sub-section shall be deemed to prohibit an
insurance agent from procuring life insurance business in or from any area and submitting
the proposals direct to the principal office of the insurer in India.
47 of 1950. (3) Within sixty days of the commencement of the Insurance (Amendment) Act, 1950
every chief agent shall file with the insurer concerned a full list of the insurance agents
employed by him, indicating the terms of the contract between the chief agent and each of
such insurance agents and the business secured by each of such agents, and if any chief
agent fails to file such a list with the period specified, any commission payable to such chief
agent on premiums received from the date of the expiry of the said period of sixty days until
the date of the filing of the said list, shall, notwithstanding anything in any contract to the
contrary, cease to be so payable.
(4) Every contract between an insurer carrying on life insurance business and special
agent, or between a chief agent of such insurer and a special agent, shall be in writing and the
terms contained in Part C of the Sixth Schedule shall be deemed to be incorporated in, and
form part of, every such contract:
Provided that the Authority may, in the case of a contract between a co-operative life
insurance society as defined in clause (b) of sub-section (1) of section 95 and a co-operative
2 of 1912. society registered under the Indian Co-operative Societies Act, 1912, or under any other law
for the time being in force and acting as a special agent, alter, to such extent as he thinks fit,
all or any of the said terms.
(5) A certified copy of every contract as is referred to in sub-section (1) or sub-section
(4) shall be furnished by the insurer or the chief agent to the Authority within thirty days of
his entering into such contract, and intimation of any change in any such contract shall be
furnished by the insurer or the chief agent with full particulars there of to the Authority
within thirty days of the making of any such change.
(6) No such contract as is referred to in sub-section (1) or sub-section (4) shall be
entered into or renewed for a period exceeding ten years at any one time, and, notwithstanding
the terms of any contract to the contrary, no option to renew any such contract given to any
of the parties shall be enforceable with the consent of the other.
(7) Every contract between an insurer and person acting on behalf of such insurer who
47 of 1950. before the commencement of the Insurance (Amendment) Act, 1950, has been employing
insurance agents for the purpose of life insurance business, which is subsisting on such
commencement, shall terminate after the expiration of ten years from such commencement, if
it does not terminate earlier:
Provided that every such contract shall be modified by the parties before the Ist day of
January, 1951, to bring it into conformity with this Act, and any such modification shall—
(i) as respects remuneration, whether in respect of business already procured or
in respect of business to be procured thereafter, be such as may be mutually agreed
upon between the parties, subject, in the case of remuneration payable on business
100
procured before such commencement, to a maxmum of an over-riding commission of

two and a half per cent. plus a further commission not exceeding three-quarters per
cent. On premiums in respect of which no commission is payable to any insurance
agent;
(ii) be deemed to include all the terms specified in Part B or Part C of the Sixth
Schedule, as the case may be:
Provided further that, in the event of any dispute as to the terms of any fresh contract,
the matter shall be referred to arbitration.
(8) Any such contract as is referred to in sub-section (7) which was subsisting on the
1st day of January, 1949, but has terminated or has been terminated before the commencement
of the Insurance (Amendment) Act, 1950, shall be subject to the maximum limits specified in 47 of 1950.
clause (i) of the proviso to sub-section (7) as respects remuneration, if any, payable on
business procured before the termination of the contract.
(9) Nothing in this section shall be deemed to prevent any special agent from receiving
any renewal commission on policies effected through him as an insurance agent at any time
before his appointment as such special agent.
(10) If any dispute arises as to whether a person is or was a chief agent or a special
agent for the purposes of this Act, the matter shall be referred to the Authority whose
decision shall be final.
(11) Every insurer shall maintain a register in which the name and address of every
chief agent appointed by him, the date on which the appointment was made and the date, if
any, on which the appointment ceased shall be entered, and a separate register in which
similar particulars relating to every special agent shall be entered, and every chief agent shall
maintain a register in which similar particulars relating to every special agent appointed by
him shall be entered.
Issue of 42D. (1) The Authority or an officer authorised by it in this behlaf shall, in the manner
licence to determined by the regulations made by the Authority and on payment of the fees determined
intermediary or
insurance by the regulations made by the Authority, issue to any person making an application in the
intermediary. manner determined by the regulations, and not suffering from any of the disqualifications
herein mentioned, a licence to act as an intermediary or an insurance intermediary under this
Act:
Provided that,—
(a) in the case of an individual, he does suffer from any of the disqualifications
mentioned in sub-section (4) of section 42, or
(b) in the case of a company, or firm, any of its directors or partners does not
suffer from any of the said disqualifications.
* * * * *
(3) A licence issued under this section shall remain in force for a period of three years
only from the date of issue, but shall, if the applicant, being an individual does not, or being
a company or firm any of its directors or partners does not suffer from any of the
disqualifications mentioned in clauses (b), (c), (d), (e) and (f) of sub-section (4) of section 42
and the application for renewal of licence reaches the issuing authority at least thirty days
before the date on which the licence ceases to remain in force, be renewed for a period of
three years at any one time on payment of the fee, determined by the regulations, made by
the Authority and additional fee for an amount determined by the regulations, not exceeding
one hundred rupees by way of penalty, if the application for renewal of the licence does not
101
reach the issuing authority at least thirty days before the date on which the licence ceases to
remain in force.
* * * * *
(8) Any person who acts as an intermediary or an insurance intermediary without
holding a licence issued under this section to act as such, shall be punishable with fine, and
any insurer, or any person who appoints as an intermediary or an insurance intermediary or
any person not licensed to act as such or transacts any insurance business in India through
any such person, shall be punishable with fine.
every director, manager, secretary or other officer of the company, and every partner of the
firm who is knowingly a party to such contravention shall be punishable with fine.
42E. (1) No intermediary or insurance intermediary shall be paid or contract to be paid Commission,
by way of commission, fee or as remuneration in any form, an amount exceeding thirty per brokerage or
fee payable to
cent. of the premium payable as may be specified by the regulations made by the Authority, intermediary or
in respect of any policy or policies effected through him: insurance
intermediary.
Provided that the Authority may specify different amounts payable by way of
commission, fee or as remuneration to an intermediary or insurance intermediary or different
classes of business of insurance.
(2) Without prejudice to the provisions contained in this Act, the Authority may, by
the regulations made in this behalf, specify the requirements of capital, form of business and
other conditions to act as an intermediary or insurance intermediary.
* * * * *
43. Every insurer and every person who acting on behalf of an insurer employs insurance Register of
agents shall maintain a register showing the name and address of every insurance agent insurance
agents.
appointed by him and the date on which his appointment began and the date, if any, on
which his appointment ceased.
44. (1) Notwithstanding anything to the contrary contained in any contract between Prohibition of
any person and an insurance agent, providing for the forfeiture or stoppage of payment of cessation of
payments of
renewal commission to such Insurance agent no such person shall, in respect of life insurance commission.
business transacted in India, refuse payment to an insurance agent of commission due to
him on renewal premium under the agreement by reason only of the termination of his
agreement, except for fraud:
Provided that—
(a) such agent ceases to act for the insurer concerned after the Central Government
has notified in the Official Gazette that it is satisfied that the circumstances in which
the said insurer is placed are such as to justify the agent's ceasing to act for him; or
(b) such agent has served the insurer continually and exclusively in respect of
life insurance business for at least five years and policies assuring a total sum of not
less than fifty thousand rupees effected through him for the insurer were in force on a
date one year before his ceasing to act as such agent for the insurer, and that the
commission on renewal premiums due to him does not exceed four per cent. in any
case; or
(c) such agent has served the insurer continually and exclusively for at least ten
years and after his ceasing to act as such agent he does not directly or indirectly solicit
or procure insurance business for any other person.
102
Explanation.— For the purposes of this sub-section, service of an insurance agent

under a chief agent of the insurer, whether before or after the commencement of the Insurance
(Amendment) Act, 1950, shall be deemed to be service under the insurer. 47 of 1950.
(2) Any commission payable to an insurance agent, under the provisions of clauses
(b) and (c) of the proviso to sub-section (1) shall, notwithstanding the death of the agent,
continue to be payable to his heirs for so long as such commission would have been payable
had such insurance agent been alive.
Power to call 44A. For the purposes of ensuring compliance with the provisions of sections 40A,
for 40B, 40C, 42B and 42C the Authority may by notice—
information.
(a) require from an insurer, principal agent, chief agent or special agent such
information, certified if so required by an auditor or actuary, as he may consider
necessary;
(b) require an insurer, principal agent, chief agent or special agent to submit for
his examination at the principal place of business of the insurer in India, any book of
account, register or other document, or to supply any statement which may be specified
in the notice;
(c) examine any officer of an insurer or a principal agent, chief agent or special
agent on oath, in relation to any such information, book, register, document or statement
and adminster the oath accordingly,
and an insurer, principal agent, chief agent or special agent shall comply with any such
requirement with such time as may be specified in the notice.
Special Provisions of Law
Policy not to
45. No policy of life insurance effected before the commencement of this Act shall after
be called in
question on the expiry of two years from the date of commencement of this Act and no policy of life
ground of insurance effected after the coming into force of this Act shall after the expiry of two years
mis-
from the date on which it was effected, be called in question by an insurer on the ground that
statement
after two a statement made in the proposal for insurance or in any report of a medical officer, or referee,
years. or friend of the insured, or in any other document leading to the issue of the policy, was
inaccurate or false, unless the insurer shows that such statement was on a material matter or
suppressed facts which it was material to disclose and that it was fraudulently made by the
policyholder and that the policyholder knew at the time of making if that the statement was
false or that it suppressed facts which it was material to disclose:
Provided that nothing in this section shall prevent the insurer from calling for proof of
age at any time if he is entitled to do so, and no policy shall be deemed to be called in
question merely becasue the terms of the policy are adjusted on subsequent proof that the
age of the life insured was incorrectly stated in the proposal.
* * * * *
Claims on 47A. (1) In the event of any dispute relating to the settlement of a claim on a policy of
small life life insurance assuring a sum not exceeding two thousand rupees (exclusive of any profit or
insurance
policies. bonus not being a guaranteed profit or bonus) issued by an insurer in respect of insurance
business transacted in India, arising between a claimant under the policy and the insurer
who issued the policy or has otherwise assumed liability in respect thereof, the dispute may
at the option of the claimant be referred to the Authority for decision, and the Authority may
after giving an opportunity to the parties to be heard and after making such further inquiries
as it may think fit, decide the matter.
(2) The decision of the Authority under this sub-section shall be final and shall not be
called in question in any court, and may be executed by the court which would have been
103
competent to decide the dispute if it had not been referred to the Authority as if it were a
decree passed by that court.
(3) There shall be charged and collected in respect of the duties of the Authority under
this section such fees whether by way of percentage or otherwise as may be prescribed.
48. (1) Where the insurer is a company incorporated under the Indian Companies Directors of
insurers being
7 of 1913. Act, 1913, or under the Indian Companies Act, 1882, or under the Indian Companies Act,
6 of 1882. companies.
1866, or under any Act repealed thereby and carries on the business of life insurance, not
10 of 1866.
less than one-fourth of the whole number of the directors of the company the number to
be elected not being less than two in any case shall, notwithstanding anything to the contrary
in the Articles of Association of the company, be elected in the prescribed manner by the
holders of policies of life insurance issued by the company.
(2) Only and all persons holding otherwise than as assignees policies of life insurance
issued by the company of such minimum amount and having been in force for such minimum
period as may be prescribed shall unless disqualified under sub-section (2A) be eligible for
election as directors under sub-section (1), and only and all persons holding policies of life
insurance issued by the company and having been in force at the time of the election for not
less than six months shall be eligible to vote at such elections:
Provided that the assignment of a policy to the person who took out the policy shall
not disqualify that person for being eligible for election as a director under sub-section (1).
(2A) A person shall be ineligible for election as a director under sub-section (1) of any
company if he is a director, officer, employee, or legal or technical adviser of that company or
of any other insurer, and shall cease to be a director under sub-section (1) if after election he
acquires any disqualification specified in this sub-section or no longer holds the qualifications
required by sub-section (2):
Provided that nothing in this sub-section shall disqualify a person who is an elected
director under sub-section (1) and is not otherwise disqualified under this sub-section, from
being re-elected:
Provided further that the Authority may exempt any director of a subsidiary company
of the insurer from any disqualification imposed by this sub-section.
(3) The Central Government may, for such period, or to such extent and subject to such
conditions as may be specified by it in this behalf, exempt from the operation of this section—
(a) any Mutual Insurance Company as defined in clause (a) of sub-section (1) of
section 95, in respect of which the Authority certifies that in its opinion owing to the conditions
governing membership of the company or to the nature of the insurance contracts undertaken
by it the application of the provisions of this section to the company is impracticable, or
(b) any company in respect of which the Authority certifies that in its opinion the
company, having taken all reasonable steps to achieve compliance with the provisions of
this section, has been unable to the obtain the required number of directors with the required
qualifications.
(4) This section shall not take effect, in respect of any company in existence at the
commencement of this Act, until the expiry of one year therefrom, and in respect of any
company incorporated after the commencement of this act, until the expiry of two years from
the date of registration to carry on life insurance business.
48A. No insurance agent who solicits or procures life insurance business, and no chief Life insurance
agent or special agent, shall be eligible to be or remain a director of any insurance company agents not to
be directors of
carrying on life insurance business: life insurance
companies.
104
Provided that any director holding office at the commencement of the Insurance
(Amendment) Act, 1946, shall not become ineligible to remain a director by reason of this 6 of 1946.
section until the expiry of six months from the commencement of that Act.
* * * * *
Restriction on 49. (1) No insurer, being an insurer specified in sub-clause (a) (ii) or sub-clause (b) of
dividends and
clause (9) of section 2, who carries on the business of life insurance or any other class or
bonuses.
sub-class of insurance business to which section 13 applies shall, for the purpose of declaring
or paying any dividend to shareholders or any bonus to policyholders or of making any
payment in service of any debentures, utilize directly or indirectly any portion of the life
insurance fund or of the fund of such other class or sub-class of insurance business, as the
case may be, except a surplus shown in the valuation balance-sheet in such form as may be
specified by the regulations made by the Authority submitted to the Authority as part of the
abstract referred to in section 15 as result of an actuarial valuation of the assets and liabilities
of the insurer; nor shall he increase such surplus by contributions out of any reserve fund or
otherwise unless such contributions have been brought in as revenue account applicable to
that class or sub-class of insurance business on or before the date of the valuation aforesaid,
except when the reserve fund is made up solely of transfers from similar surpluses disclosed
by valuations in respect of which returns have been submitted to the Authority under
section 15 of this Act or to the Central Government under section 11 of the Indian Life
Assurance Companies Act, 1912: 6 of 1912.
Provided that payments made out of any such surplus in service of any debentures
shall not exceed fifty per cent. of such surplus including any payment by way of interest on
the debentures, and interest paid on the debentures shall not exceed ten per cent. of any
such surplus except when the interest paid on the debentures is offset against the interest
credited to the fund or funds concerned in deciding the interest basis adopted in the valuation
disclosing the aforesaid surplus:
Provided further that the share of any such surplus allocated to or reserved for the
shareholders (including any amount for the payment of dividends guaranteed to them,
whether by way of first charge or otherwise) shall not exceed such sums as may be specified
by the Authority and such share shall in no case exceed ten per cent. of such surplus in case
of participating policies and in other cases the whole thereof.
* * * * *
Prohibition of 52. (1) No insurer shall after the commencement of this Act begin, or after three years
business on from that date continue to carry on, any business upon the dividing principle, that is to say,
dividing
principle. on the principle that the benefit secured by a policy is not fixed but depends either wholly or
partly on the results of a distribution of certain sums amongst policies becoming claims
within certain time-limits, or on the principle that the premiums payable by a policyholder
depend wholly or partly on the number of policies becoming claims within certain time-limits:
Provided that nothing in this section shall be deemed to prevent an insurer from
allocating bonuses to holders of policies of life insurance as a result of a periodical actuarial
valuation either as reversionary additions to the sums insured or as immediate cash bonuses
or otherwise:
Provided further that an insurer who continues to carry on insurance business on the
dividing principle after the commencement of this Act shall with hold from distribution a sum
of not less than forty per cent. of the premiums received during each year after the
commencement of this Act in which such business is continued so as to make up the amount
required for investment under section 27.
(2) On the expiry of the period of three years referred to in sub-section (1), or on the
insurer's ceasing before such expiry but at any time after the commencement of the Insurance
105
13 of 1941. (Amendment) Act, 1941 to carry on business on the dividing principle, the insurer shall
forthwith cause an investigation to be made by an actuary, who shall determine the amount
accumulated out of the contributions received from the holders of all policies to which the
dividing principle applies and the extent of the claims of those policyholders against the
realisable assets of the insurer, and shall, before the expiration of six months from the date on
which he is entrusted with the investigation, make recommendations regarding the distribution,
whether by cash payments or by the allocation of paid-up policies or by a combination of
both methods, of such assets as he finds to appertain to such policyholders; and the insurer
shall, before the expiry of six months from the date on which the actuary makes his
recommendations, distribute such assets in accordance with those recommendations.
(3) Where at any time prior to the commencement of the Insurance (Amendment) Act,
13 of 1941. 1941, an insurer has ceased to carry on business on the dividing principle, the insurer shall,
before the expiration of two months from the commencement of that Act, report to the
Authority the measurers taken or proposed by him for the distribution among holders of
policies to which the dividing principle applies of the assets due to them; and the Authority
may either sanction such measures or refuse its sanction, and, if it refuses its sanction or if
the insurer does not report to it as required by this sub-section, the provisions of sub-
section (2) shall apply to the insurer forthwith.
MANAGEMENT BY ADMINISTRATOR
52A. (1) If at any time the Authority has reason to believe that an insurer carrying on When
life insurance business is acting in a manner likely to be prejudicial to the interests of holders Administrator
for
of life insurance policies, it may, after giving such opportunity to the insurer to be heard as management
it thinks fit, make a report thereon to the Central Government. of insurance
business may
be appointed.
(2) The Central Government, if it is of opinion after considering the report that it is
necessary or proper to do so, may appoint an Administrator to manage the affairs of the
insurer under the direction and control of the Authority.
(3) The Administrator shall receive such remuneration as the Central Government may
direct and the Central Government may at any time cancel the appointment and appoint some
other person as Administrator.
* * * * *
52BB. (1) * * * * * Powers of

Administrator
(2) Any person aggrieved by an order made by the Administrator under sub-section (1) respecting
property
may, within fourteen days from the date on which the order is served on him, appeal against liable to
such order to the Central Government and the Central Government may pass such order attachment
under section
thereon as it thinks fit. 106.
(3) An order made by the Administrator under sub-section (1) shall, subject to any
other order made by the Central Government on appeal, be in force for a period of three
months from the date of the order unless, before the expiry of the said period, an application
is made under sub-section (1) of section 106 to the court competent to exercise jurisdiction
under that sub-section, and when such an application is made, the order shall, subject to any
order made by that court, continue inforce as if it were an order of attachment made by that
court in proceeding under that section.
* * * * *
106
(10) Save as provided in this section or in section 106, and notwithstanding anything
contained in any other law for the time being in force,—
(a) no suit or other legal proceeding shall lie in any court to set aside or modify
any order of the Administrator or the Central Government made under this section, and
* * * * *
Termination 52D. If at any time, on a report made by the authority in this behalf, it appears to the
of
Central Government that the purpose of the order appointing the Administrator has been
appointment
of fulfilled or that for any reason in is undesirable that the order of appointment should remain
Administrator. in force, the Central Government may cancel the order and thereupon the Administrator shall
be divested of the management of the insurance business which shall, unless otherwise
directed by the Central Government, again vest in the person in whom it was vested
immediately prior to the date of appointment of the Administrator.
Finality of 52E. Any order or decision of the Central Government made in pursuance of section
decision
appointing
52A or section 52D shall be final and shall not be called in question in any Court.
Administrator.
Penalty for 52F. If any director or officer of the insurer or any other person fails to deliver to the
withholding
Administrator any books of account, registers or any other documents, in his custody
documents of
property relating to the business of the insurer, the management of which has vested in the Administrator,
from or retains any property of such insurer, he shall be punishable with imprisonment which may
Administrator.
extend to six months, or with fine which may extend to one thousand rupees, or with both.
Protection of 52G. (1) * * * * *
action taken
under sections
52A to 52D.
(2) No suit or other legal proceeding shall lie against the Central Government or the
Authority for any damage caused or likely to be caused by anything which is in good faith
done or intended to be done under section 52A, section 52B, or section 52D.
ACQUISITION OF THE UNDERTAKINGS OF INSURERS IN CERTAIN CASES
Power of 52H. (1) If, upon receipt of a report from the Authority, the Central Government is
Central
Government
satisfied that an insurer,—
to acquire
undertakings (a) has persistently failed to comply with—
of insurers in
certain cases. (i) any direction given to him under section 34, section 34F or section 34G, or
(ii) any order made under section 34E; or
(b) is being managed in a manne detrimental to the public interest or to the

interests of his policyholders, or shareholders, and that—
(i) in the public interest, or
(ii) in the interests of the policyholders or shareholders of such insurer,
it is necessary to acquire the undertaking of such insurer, the Central Government may, by
notified order, acquire the undertaking of such insurer (hereafter in this section and in
sections 52-I, 52J and 52N and in the Eighth Schedule referred to as the acquired insurer) with
effect from such date as may be specified in the order (hereinafter in this section and in
section 52-I and 52J and in the Eighth Schedule referred to as the appointed day):
Provided that no undertaking of an insurer shall be so acquired unless such insurer

has been given a reasonable opportunity of showing cause against the proposed action.
107
Explanation.—For the purposes of this section and of sections 52-I to 52N—

(a) "notified order" means an order published in the Official Gazette,
(b) "undertaking", in relation to an insurer incorporated outside India. means the
undertaking of the insurer in India.
(2) Subject to the other provisions contained in this section and in sections 52-I to
52M, on the appointed day, all the assets and liabilities of the undertaking of the acquired
insurer shall stand transferred to, and vest in, the Central Government.
(3) The assets and liabilities of the undertaking of the acquired insurer shall be deemed
to include all rights, powers, authorities and privileges and all property whether movable or
immovable, including, in particular cash balances, reserve funds, investments, deposts and
all other interest and rights in, or arising out of, such property as may be in the possession
of, or held by, the acquired insurer immediately before the appointed day and all books,
accounts and documents relating thereto, and shall also be deemed to include all debts,
liabilities and obligations, of whatever kind, then existing of the acquired insurer.
(4) Notwithstanding anything contained in sub-section (2), the Central Government
may, if it is satisfied that all the assets and liabilities of the undertaking of the acquired insurer
should, instead of vesting in the Central Government, or continuing to so vest, vest in a
corporation or company, whether established under the scheme made under section 52-I or
not (hereafter in this section and in sections 52-I to 52N and in the Eight Schedule referred to
as the acquiring insurer), or order, direct that the assets and liabilities of the said undertaking,
shall vest in the acquiring insurer, either on the publication of the notifed order or on such
other date as may be specified in this behalf in the direction.
(5) Where the undertaking of the acquired insurer vests in an acquiring insurer under
sub-section (4), the acquiring insurer shall, on and from the date of such vesting, be deemed
to have become the transferee of the acquired insurer and all the rights and liabilities in
election to the acquired insurer shall, on and from the date of such vesting be deemed to
have been the rights and liabilities of such acquiring insurer.
(6) Unless otherwise expressly provided by or under this section or sections 52-I to
52M, all contracts, deeds, bonds, agreements, power-of-attorney, grants of legal representation
and other instruments of whatever nature subsisting or having effect immediately before the
appointed day and to which the acquired insurer is a party or which are in favour, of the
acquired insurer shall be of as full force and effect against or in favour, of the Central
Government or, as the case may be, the acquiring insurer, and may be enforced or acted upon
as fully and effectually as if in the place of the acquired insurer the Central Govrernment or
the acquiring insurer had been a party thereto or as if they had been issued in favour of the
Central Government or the acquiring insurer, as the case may be.
(7) If, on the appointed day, any suit, appeal or other proceeding of whatever nature,
is pending by or against the acquired insurer, the same shall not abate, be discontinued or be,
in any way prejudicially affected by reason of the transfer of the undertaking of the acquired
insurer or of anything contained in this section or in sections 52-I to 52M, but the suit, appeal
or other proceeding may be continued, prosecuted and enforced by or against the Central
Government or the acquiring insurer, as the case may be.
52.-I (1) The Central Government may make a scheme for carrying out the purposes of Power of
sections 52H and 52J to 52M (both inclusive) in relation to the acquired insurer. Central
Government
(2) In particular, and without prejudice to the genearlity of the foregoing power, the to make
said scheme may provide for all or any of the following matters, namely:— Scheme.
(a) tranfer of the undertaking, including the property, assets and liabilities of the
acquired insurer to an acquiring insurer, and the capital, constitution, name and office
of the acquiring insurer;
(b) the constitution of the first board of management (by whatever name called)
of the acquiring insurer and all such matters in connection therewith or incidental
thereto as the Central Government may consider to be necessary or expedient;
108
(c) the contiuance of the service of all the employees of the acquired insurer
(excepting such of them as, not being workmen within the meaning of the Industrial
Disputes Act, 1947, are specifically mentioned in the scheme) in the Central Government 14 of 1947.
or in the acquiring insurer, as the case may be, on the same terms and conditions, so far
as may be, as are specified in clauses (i) and (j) of sub-section (2) of section 37A so far
as they may apply;
(d) the continuance of the rights of any person who, on the appointed day, is
entitled to, or is in receipt of, a pension or other superannuation or compassionate
allowance or benefit from the acquired insurer or any provident, pension or other fund
or any authority administering such fund to be paid by, and to receive from the Central
Government or the acquiring insurer, as the case may be, or any provident, pension or
other fund or any authority administering such fund, the same pension, allowance or
benefit so long as he observes the conditions on which the pension, allowance or
benefit was granted, and if any question arises whether he had so observed such
condition, the question shall be determined by the Central Government and the decision
of the Central Government thereon shall be final;
(e) the manner of payment to the acquired insurer in full satisfaction of his claim in
relation to the compension payable in accordance with the provisions of section 52J;
(f) the provision, if any, for completing the effectual transfer to the Central
Government or the acquiring insurer of any asset or liability which forms part of the
undertaking of the acquired insurer in any country outside India;
(g) such incidental, consequential and supplemental matters as may be necessary
to secure that the transfer of the undertaking, property, assets and liabilities of the
acquired insurer to the Central Government or the acquiring insurer, as the case may
be, is effectual and complete.
(3) The Central Government may, be notification in the Official Gazette, and to, amend
or vary any scheme made under this section.
(4) Every scheme made under this section shall be published in the Official Gazette.
(5) Copies of every scheme made under this section shall be laid before each House of
Parliament as soon as may be after it is made.
(6) The provisions of sections 52H and 52J to 52M and of any scheme made under this
section shall have effect notwithstanding anything to the contrary contained in any other
provision of this Act or in any other law or any agreement, award or other instrument for the
time being in force.
Compensation 52J. (1) The acquired insurer shall be given by the Central Government or the acquiring
to be given to insurer, as the case may be, such compensation in respect of the transfer of the undertaking
the acquired
of the acquired insurer as is determined in accordance with the principles contained in the
insurer.
Eighth Schedule.
(2) The amount of compensation to be given in accordance with the principles contained
in the Eighth Scheduled shall be determined, in the first instance, by the Central Government
or the acquiring insurer, as the case may be, in consultation with the Authority, and shall be
offered by it to the acquired insurer, in full satisfaction thereof.
(3) If the amount of compensation offered in terms of sub-section (2) is not acceptable
to the acquired insurer, he may, before such date as may be notified by the Central Government
in the Official Gazette, request the Central Government in writing to have the matter referred
to the Tribunal constituted under section 52K.
(4) If before the date notified under sub-section (3) the Central Government does not
receive request as provided in that sub-section, the amount of compensation offered under
sub-section (2), or where a reference has been made to the Tribunal, the amount determined
by it, shall be compensation payable under sub-section (1) and shall be final and binding on
all the parties concerned.
109
(5) Where the Central Government does not receive request as provided in sub-section
(3), the compensation payable in pursuance of the provisions of this section shall become
due for payment on the expiry of one year from the appointed day, and where a reference has
been made to the Tribunal under sub-section (3), the amount determined by the Tribunal as
compensation shall become due for payment on the expiry of one year from the appointed
day or on the date of decision of the Tribunal, whichever is earlier.
(6) If between the appointed day and the date on which the compensation becomes
due in pursuance of sub-section (5), any facts come to light which call for revision of the
amount of the compensation, the necessary modification of the amount of the compensation
shall be made and the amount of the compensation so determined shall be compensation
payable in pursuance of sub-section (1).
(7) There shall also be paid simple interest at the rate of three per cent. per annum on
the amount of the compensation for the period from the appointed day to the date on which
payment of the compensation becomes due.
52K. (1) The Central Government may, for the purposes of sections 52H to 52J, constitute Constitution
a Tribunal which shall consist of a chairman and two other members. of the
Tribunal.
(2) The chairman shall be a person who is, or has been, a Judge of a High Court or of
the Supreme Court and of the two other members, one shall be a person who, in the opinion
of the Central Government has had experience of matters connected with general insurance
and the other shall be a person who is chartered accountant within the meaning of the
38 of 1949. Chartered Accountants Act, 1949.
(3) If, for any reason, a vacancy occurs in the office of the chairman or any other
member of the Tribunal, the Central Government may fill the vacancy by appointing another
person thereto in accordance with the provisions of sub-section (2), and any proceedings
may be contributed before the Tribunal so constituted from the stage at which the vacancy
occurred.
(4) The Tribunal may, for the purpose of determining any compensation payable under
section 52J, choose one or more persons having special knowledge or experience of any
relevant matter to assist it in the determination of such compensation.
52L. (1) The Tribunal shall have the powers of a Civil Court, while trying a suit, under Tribunal to
5 of 1908. the Code of Civil Procedure, 1908, in respect of the following matters, namely:— have powers
to Civil
(a) summoning and enforcing the attendance of any person and examining him Court.
on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents.
(2) Notwithstanding anything contained in sub-section (1) or in any other law for the
time being in force, the Tribunal shall not compel the Central Government or the Authority—
(a) to produce any books of account, or other documents which the Central
Government or the Authority claims to be confidential nature;
(b) to make any such books or documents a part of the record of the proceedings
before the Tribunal;
(c) to give inspection of any such books or documents to any party before it and
to any other person.
(3) Any proceeding before the Tribunal shall be deemed to be a judicial proceeding
45 of 1860. within the meaning of sections 193 and 228 of the Indian Penal Code and the Tribunal shall
be deemed to be a Civil Court for the purposes of section 195 and Chapter XXXV of the
5 of 1898. Code of Criminal Procedure, 1898.
110
Procedure of 52M. (1) The Tribunal shall have power to regulate its own procedure.
the Tribunal.
(2) The Tribunal may hold the whole or any part of its inquiry in camera.
(3) Any clerical or arithmetical error in any order of the Tribunal or any error arising
therein from any accidental slip or omission may, at any time, be corrected by the Tribunal
either of its own motion or one the application of any of the parties.
Special 52N. Where any acquired insurer, being a company, has in accordance with the
provisions for provisions of this Act, collected and distributed any monies paid to him by the Central
the
dissolution of
Government or the acquiring insurer, as the case may be, by way of compensation or otherwise,
acquired and has also complied with any directions given to him by the Central Government or the
insurers. acquiring insurer, as the case may be, for the purpose of securing that the ownership of any
property or any right is effectively transferred to the Central Government or the acquiring
insurer, as the case may be, the Central Government may, on application being made to it in
this behalf by such insurer, grant a certificate to the insurer that there is no reason from the
continued existence of the insurer, and upon the publication of such certificate, the insurer
shall be dissolved.
WINDING UP
Winding up 53. (1) The Tribunal may order the winding up in accordance with the Companies Act,
by the Court. 1956 of any insurance company and the provisions of the Act shall, subject to the provisions 1 of 1956.
of this Act, apply accordingly.
(2) In addition to the grounds on which such an order may be based, the Tribunal may
order the winding up of an insurance company—
* * * * *
(b) if the Authority who is hereby authorised to do so, applies in this behalf to
the Tribunal on any of the following grounds, namely:—
(i) that the company has failed to deposit or to keep deposited with the
Reserve Bank of India the amounts required by section 7 or section 98;
* * * * *
Scheme for 58. (1) * * * * *
partial
winding up of (4) an order of the Tribunal confirming a scheme under this section whereby the
insurance memorandum of a company is altered with respects to its object shall as respects the alteration
companies. have effect as if it were on order confirmed under section 12 of the Indian Companies
Act,1913, and the provisions of sections 15 and16 of the Act shall apply accordingly. 7 of 1913.
Return of 59. In the winding up of an insurance company (otherwise than in a case of which
deposits. section 58 applies) and in the insolvency of any other insurer the liquidator or assignee as
the case may be shall apply to the Tribunal for an order for the return of the deposit made by
the company or the insurer as the case may be under section 7 or section 98 and the Tribunal
shall on such application order a return of the deposit subject to such terms and conditions
as it shall direct.
* * * * *
PART II A
INSURANCE ASSOCIATION OF INDIA, COUNCILS OF THE ASSOCIATION AND COMMITTEES THEREOF
Incorporation 64A. (1) All insurers carrying on insurance business in India at the commencement of
of the the Insurance (Amendment) Act, 1950, all insurers who may after such commencement begin 47 of 1950.
Insurance
to carry on issurance business in India, and, if the Central Government, by notification in the
Association
of India. Official Gazette, so declares all provident societies carrying on insurance business in India
on the date of such notification and all provident societies which may begin to carry on
insurance business in India after such date are hereby constituted a body corporate by the
name of the Insurance Association of India.
(2) All insurers and provident societies incoporated or domiciled in India shall be
known as members of the Insurance Association of India, and all insurers and provident
111
societies incorporated or domiciled elsewhere than in India shall be known as associate

members of that Association.
(3) The Insurance Association of India shall have perpetual succession and a common
seal and shall have power to acquire, hold and dispose of all property, both movable and
immovable, and shall by the said name sue and be sued.
64B. (1) The Authority shall take or cause to be taken through such agency as he Entry of
thinks fit such steps as may be necessary to have the names of all insurers and provident names of
members in
societies, who or which are entitled to have their names entered in the register of members
the register.
and associate members of the Insurance Association of India maintained for this purpose
entered therein.
(2) Where any insurer or provident society has ceased to carry on business as such,
the Authority shall cause such steps to be taken as may be necessary to have the name of
such insurer or provident society, as the case may be, removed from the register.
64C. There shall be two Councils of the Insurance Association of India, namely:— Councils of
the Insurance
(a) the Life Insurance Council consisting of all the members and associate Association
members of the Association who carry on life insurance business in India, and of India.
(b) the General Insurance Council consisting of all the members and associate
members of the Association who carry on general insurance business in India.
64D. It shall be lawful for any member of the Life Insurance Council or the General Authority of
Insurance Council to authorise any individual, whether an officer of the insurer or not, to act members of
Association
as the representative of such member at any meeting of the Council concerned or to stand as to act
a candidate for any election held by that Council. through
agents.
* * * * *
64F. (1) The Executive Committee of the Life Insurance Council shall consist of the Executive
following persons, namely:— Committees
of the Life
(a) two official nominated by the Authority, one as the chairman and the other as Insurance
a member; Council and
the General
(b) eight representative of members of the Insurance Association of India carrying Insurance
Council.
on life insurance business elected in their individual capacity by the said members in
such manner, from such groups of members and from such areas as may be specified
by the Authority;
(c) one non-official not connected with any insurance business, nominated by
the Authority; and
(d) five person conected with life insurance business, nominated by Authority
for the purpose of representing such groups of insurers carrying on life insurance
business or such areas as have not been able to secure adequate representation on the
Executive Committee of the Life Insurance Council or for any other purpose.
(2) The Executive Committee of the General Insurance Council shall consist of the
following persons, namely:—
(a) two officials nominated by the Authority, one as the chairman and the other
as member;
(b) eight representative of members of the Insurance Association of India carrying
on general insurance business elected in their individual capacity by the said members
in such manner, from such groups of members and from such areas as may be specified
by the Authority;
(c) one non-official not connected with any insurance business, nominated by
the Authority; and
112
(d) five persons connected with life insurance business, nominated by the
Authority for the purpose of representing such groups of insurers carrying on general
insurance business or such areas as have not been able to secure adequate
representation on the Executive Committee of the General Insurance Council or for any
other purpose.
(3) If anybody of person specified in sub-sections (1) and (2) fails to elect any of the
members of the Executive Committees of the Life Insurance Council or the General Insurance
Council, the Authority may nominate any person to fill the vacancy, and any person so
nominated shall be deemed to be member of the Executive Committee of the Life Insurance
Council or the General Insurance Council, as the case may be, as if he had been duly elected
thereto.
(4) No official nominated by the Authority shall be entitled, whether as chairman or as
a member, to vote in respect of any matter coming up before any meeting of the Executive
Committee of the Life Insurance Council or the Executive Committee of the General Insurance
Council, as the case may be, and subject thereto each of the said Executive Committees may,
with the approval of the Authority, make bye-law as for the transaction of any business at
any meeting of the said Committee, and any such bye-law may provide that any member of
the Committee who is interested in any matter for the time being before that. Committee may
not be present at or take part in any meeting thereof.
(5) The Life Insurance Council or the General Insurance Council may from such other
committees consisting of such persons as it may think fit to discharge such functions as may
be delegated thereto:
Provided that any action taken by any of the said Councils under this sub-section
shall be with the previous consent of the Authority, and nothing in this sub-section shall
derogate from any of the powers vested in the Executive Committees.
(6) The secretary of the Executive Committee of the Life Insurance Council and of the
Executive Committee of the General Insurance Council shall in each case be an official
nominated by the Authority.
Resignation 64G. (1) * * * * *
and filling up
of casual (2) Casual vacancies in the Executive Committee of the Life Insurance Council or of the
vacancies. General Insurance Council, whether caused by resignation, death or otherwise, shall be filled
by nomination by the Authority, and any person so nominated to fill the vacancy shall hold
office until the dissolution the Committee to which he has been nominated.
* * * * *
Power of 64-I. The Life Insurance Council, may with the approval of the Authority, authorise its
Executive
Committee of
Executive Committee to hold examinations for individuals wishing to qualify themselves as
Life insurance agents for the purpose of procuring life insurance business, and, if the Authority,
Insurance by notification in the Official Gazette, so declares then, notwithstanding anything contained
Council to in section 42, only individuals who have passed any such examination shall be eligible to
hold
examinations
apply for a licence under section 42:
for insurance Provided that nothing in this sub-section shall affect the right of any individual, who
agents.
has been licensed to act as an insurance agent under section 42 before the date of such
notification, to act as such, or to have his licence renewed from time to time.
Functions of 64J. (1) * * * * *
Executive
Committee of (2) For the purpose of enabling it effectively to discharge its functions, the Executive
Life Committee of the Life Insurance Council may collect such sums of money, whether by way of
Insurance
Council.
fees or otherwise, as may be prescribed from all members and associate members of the
Insurance Association of India who carry on life insurance business.
* * * * *
113
64L. (1) * * * * * Functions of

the Executive
(2) For the purpose of enabling it effectively to discharge its functions, the Executive Committee of
Committee of the General Insurance Council may collect such fees as may be prescribed from General
all insurers carrying on general insurance business: Insurance
Council.
Provided that if the General Insurance Council thinks fit, it may by a resolution passed
by it, waive the collection of the prescribed fees for any year and where any such resolution
has been approved by the Authority, the Executive Committee of the General Insurance
Council shall not collect any fees in relation to that year.
* * * * *
64N. The Central Government may prescribe the circumstances in which, the manner Powers of the
in which and the conditions subject to which, the Executive Committee of the Life Insurance Executive
Committees
Council and the Executive Committee of the General Insurance Council may hold joint meetings
to act
for the purpose of dealing with any matter of common interest to both Committees, and it together in
shall be lawful for the two Committees at any such joint meeting to delegate any matter under certain cases.
consideration for the determination of a sub-committee appointed for this purpose from
amongst the members of the two Committees.
* * * * *
64R. (1) For the efficient performance of its duties, the Life Insurance Council or the General
General Insurance Council, as the case may be, may— powers of
Life
* * * * * Insurance
Council and
(c) keep and maintain up-to-date a copy of the list of all insurers who are members General
or associate members of the Insurance Association of India; Insurance
Council.
(d) with the previous approval of the Authority, make regulations for—
(i) the holding of elections other than the first elections;
(ii) the summoning and holding of meetings, the conduct of business
thereat and the number of persons necessary to form a quorum;
(iii) the submission by insurers to the Executive Committee of the Life
Insurance Council, or the General Insurance Council, of such statements or
information as may be required of them and the submission of copies thereof by
the insurers to the Authority;
(iv) the levy and collection of any fees;
(v) the regulation of any other matter which may be necessary for the
purpose of enabling it to carry out its duties under this Act.
* * * * *
64S. The Central Government may exercise such powers as may be necessary for Power of
bringing the Life Insurance Council, the General Insurance Council or the Executive Committee Central
Government
of any of the said Councils, as the case may be, into effective existence for the purposes of to remove
this Part, and any such powers shall include— difficulties.
(a) the power to hold, in such manner as may be directed by the Central
Government, the first elections to the Executive Committees of the Life Insurance
Council and the Central Insurance Council;
(b) where a notification under sub-section (1) of section 64A has been issued
declaring provident societies to be members of the Insurance Association of India, the
powers to associate provident societies effectively in the exercise of all powers and
the discharge of all function of the Life Insurance Council and the Executive Committee
thereof;
(c) the power to make the provisions of section 40B applicable to the provident
societies specified in clause (b) in the same manner as they apply to insurers.
114
Power to 64T. The Central Government may, subject to such conditions and restrictions
exempt. as it may think fit to impose, exempt any insurers specified in sub-clause (c) of clause
(9) of section 2 from the operation of all or any of the provisions of this Part.
PART IIB
TARIFF ADVISORY COMMITTEE AND CONTROL OF TARIFF RATES
Establishment 64U. (1) With effect from the commencement of the Insurance (Amendment)
of Tariff Act, 1968 there shall be established a Committee, to be called the Tariff Advisory 62 of 1968.
Advisory
Committee (hereafter in this Part referred to as the Advisory Committee) to control and
Committee.
regulate the rates, advantages, terms and conditions that may be offered by insurers in
respect of general insurance business.
(2) The Advisory Committee shall be a body corporate having perpetual
succession and a common seal, with power, subject to the provisions of this Act, to
acquire, hold and dispose of property, both movable and immovable, and to contract,
and may, by the said name, sue and be sued.
Composition 64UA. (1) The Advisory Committee shall consist of the following members,
of the namely:—
Advisory
Committee. (a) the Chairperson of the Authority ex officio, who shall be the Chairman;
(b) a senior officer of the office of the Authority nominated by the Authority
who shall be the Vice-Chairman;
(c) not more than ten representatives of Indian insurers, elected (in their
individual capacities) by such insurers in such manner, from such areas and from
among such insurers or groups of insurers as may be prescribed;
(d) not more than four representatives of insurers incorporated or domiciled
elsewhere than in India but registered in India, elected (in their individual
capacities) by such insurers in such manner, and from among such insurers or
groups of insurers as may be prescribed.
(2) The Secretary to the Advisory Committee shall be an officer of the office of
the Authority nominated by the Authority.
Power to 64UB. (1) The Authority may, by notification in the Official Gazette, make
make rules in regulations to carryout the purposes of this Part.
respect of
matters in (2) In particular, and without prejudice to the generality of the foregoing power,
this Part. such regulations may provide for all or any of the following matters, namely:—
(a) the functions to be discharged by the Advisory Committee;
(b) the term of office of the members of the Advisory Committee, the
procedure for their election and the manner of filling casual vacancies in the
Advisory Committee;
(c) the travelling and other allowances payable to the members of the
Advisory Committee;
(d) the procedure for holding the meetings of the Advisory Committee and
for transaction of business thereat.
(3) The Advisory committee may, by notification in the Official Gazette, with the
previous approval of the Authority make regulations for all or any of the following
matters, namely:—
(a) the constitution, powers and duties of Regional Committees and of
sub-committees constituted by the Advisory Committee or any Regional
Committee;
(b) the method of election of candidates for Regional Committees and sub-
committees, their eligibility, term of office and method of filling casual vacancies;
(c) the procedure for convening meetings and transaction of business by
Regional Committees and sub-committees;
115
(d) the appointment of officers and other employees of the Advisory

Committee and of Regional Committees or sub-committees constituted by or
under the Advisory Committee or any Regional Committee and the terms and
conditions of their service including travelling and other allowances;
(e) such other matters pertaining to procedure as are not inconsistent with
the provisions of this Act or rules made thereunder,
and may, from time to time, with the previous approval of the Authority add to amend
or vary any such regulations.
(4) The regulations made by the Tariff Committee of the General Insurance Council
under section 64-O as they were in force immediately before the commencement of the
62 of 1968. Insurance (Amendment) Act, 1968, shall, after such commencement, continue to be in
force until rules are made by the Authority under sub-section (1) and immediately after
such rules have come into effect, the regulations aforesaid shall cease to be valid.
(5) The Chairperson of the Authority shall be in direct charge of the establishment
of the Advisory Committee and the Secretary of the Advisory Committee shall work
under his direction and control.
64UC. (1) The Advisory Committee may, from time to time and to the extent it Power of
deems expedient, control and regulate the rates, advantages, terms and conditions Advisory
Committee to
that may be offered by insurers in respect of any risk or of any class or category of
regulate rates,
risks, the rates, advantages, terms and conditions of which, in its opinion, it is proper advantages,
to control and regulate, and any such rates, advantages, terms and conditions shall be etc.
binding on all insurers:
Provided that the Authority may, permit any insurer to offer, during such period
(being not more than two years but which may be extended by periods of not more
than two years at a time) and subject to such conditions as may be specified by him,
rates, advantages, terms and conditions different from those fixed by the Advisory
Committee in respect of any particular category of risks, if it is satisfied that such
insurer generally issues policies only to a restricted class of the public or under a
restricted category of risks.
(2) In fixing, amending or modifying any rates, advantages, terms or conditions,
relating to any risk, the Advisory Committee shall try to ensure, as far as possible, that
there is no unfair discrimination between risks of essentially the same hazard, and also
that consideration is given to past and prospective loss experience:
Provided that the Advisory Committee may, at its discretion, make suitable
allowances for the degree of credibility to be assigned to the past experience, including
allowances for random fluctuations and may also, at its discretion, make suitable
allowances for future fluctuations and unforeseen future contingencies, including
hazards of conflagration or catastrophe or both.
(3) Every decision of the Advisory Committee shall be valid only after and to the
extent it is ratified by the Authority, and every such decision shall take effect from the
date on which it is so ratified by the Authority or, if the Authority so orders in any case,
from such earlier date as he may specify in the order.
(4) The decisions of the Advisory Committee in pursuance of the provisions of
this section shall be final.
(5) Where an insurer is guilty of breach of any rate, advantage, term or condition
fixed by the Advisory Committee, he shall be deemed to have contravened the provisions
of this Act:
Provided that instead of proceeding against the insurer for such contravention,
the Authority may, if the insurer removes the contravention by recovering the deficiency
in the premium, or where it is not practicable to do so, modifies suitably or cancels the
contract of insurance, compound the offence on payment to the Advisory Committee of
such fine, not exceeding rupees one thousand, as he may decide in consultation with the
Advisory Committee.
116
Transitional 64UD. (1) Notwithstanding anything contained in this Part, until the names of
provisions. the members of the Advisory Committee elected for the first time after the commencement
of the Insurance (Amendment) Act, 1968, are notified, the Tariff Committee of the 62 of 1968.
General Insurance Council appointed under regulations made under sub-section (2) of
section 64-O as it was in force immediately before the commencement of the Insurance
(Amendment) Act, 1968, and in existence on each commencement (hereafter in this Part
referred to as the Tariff Committee) shall continue to function and shall be deemed to
be the Advisory Committee duly elected under this Part and the Authority of Insurance
shall become the Chairman of that Committee with effect from the commencement of
the Insurance (Amendment) Act, 1968, and function as such, and any Chairman of the
Tariff Committee holding office immediately before such commencement shall cease to
be the Chairman thereof from the date of such commencement but shall continue to be
an ordinary member of the Advisory Committee:
Provided that the Chairperson of the Authority shall become the Chairman of the
Advisory Committee with effect from the commencement of the Insurance Regulatory
and Development Authority Act, 1999 and function as such, and any Chairman of the 41 of 1999.
Tariff Committee holding office immediately before such commencement shall cease to
be the Chairman.
(2) Notwithstanding anything contained in this Part, the constitutions of the
Regional Councils established under section 64P, as in force immediately before the
commencement of the Insurance (Amendment) Act, 1968 (hereafter referred to as the 62 of 1968.
Regional Councils), and of the Sectional Committees formed thereunder, existing
immediately, before such commencement, shall continue to be in full force and be of
full effect, until the regulations made by the Advisory Committee for the first time
under section 64UB come into effect and as soon as such regulations have come into
effect such constitutions shall cease to have effect.
(3) Notwithstanding anything contained in this Part, until the Secretary to the
Advisory Committee is nominated under sub-section (2) of section 64UA, the Secretary
to the Tariff Committee holding office immediately before the commencement of the
Insurance (Amendment) Act, 1968, shall function as the Secretary and shall be deemed 62 of 1968.
to have been duly nominated under this Part.
(4) All rates, advantages, terms and conditions fixed by the Tariff Committee or
the Regional Councils prior to the commencement of the Insurance (Amendment) Act,
1968, and in force immediately before such commencement shall continue, except to 62 of 1968.
such extent as they may be altered, replaced or abolished by the Advisory Committee,
to be valid and fully in force as if they were rates, advantages, terms and conditions
fixed by the Advisory Committee.
Power of the 64UE. (1) The Advisory Committee require, by notice in writing, any insurer to
Advisory supply to it such information or statements, periodical or ad hoc, as it may consider
Committee to
necessary, to enable it to discharge its functions under this Part and every insurer shall
require
information, comply with such requirements within such period as may be specified by the Advisory
etc. Committee in this behalf, failing which the insurer shall be deemed to have contravened
the provisions of this Act.
(2) Any information supplied under this section shall be certified by a principal
officer of the insurer or where the Advisory Committee has agreed in advance, by such
other officer or officers of the insurer as the principal officer of the insurer may nominate
for the prupose and if the notice so requires, also by an auditor.
(3) The Authority may, at any time, in writing, depute any subordinate of it to
make a personal inspection of the books of account, ledgers, policy-registers and
other books or documents of any insurer to verify the accuracy of any return or
statement furnished by him under sub-section (1), or to verify that full particulars have
been supplied by him in respect of all policies issued by him, and the insurer shall
provide all facilities for such inspection and make available to such person all the
books of account, ledgers, policy-registers and other books or ducuments of the
117
insurer which might be needed by him for such verification and the person deputed
may himself extract from out of the books and records of the insurer such information
as may be needed to fill up or complete the returns required to be submitted to the
Advisory Committee under this section.
(4) The Advisory Committee may, at any time, on the application of an insurer,
make arrangements for the inspection of an organisation which is concerned with the
inspection or risks, adjustment of losses or fire-fighting appliances, and may, whenever
necessary, advise insurers about the adequacy of the arrangements for the inspection
or risks and adjustment of losses or the suitability of such appliance:
Provided that no such inspection shall be made without the written permission
of the concerned organisation.
62 of 1968. 64UF. (1) On the commencement of the Insurance (Amendment) Act, 1968, all Assets and
the assets and liabilities of the General Insurance Council appertaining to its Tariff liabilities of
Committee and to its Regional Council and their Sectional Committees existing on that General
Insurance
day shall be transferred to, and vest in, the Advisory Committee. Council to
(2) The assets appertaining to the Tariff Committee, the Regional Councils, and vest in,
their Sectional Committees shall be deemed to include all rights and powers and all Advisory
Committee.
property, whether movable or immovable including, in particular, cash balance, reserve
funds; investment, deposits and all other interests and rights in, or arising out of, such
property as may be in the possession of the Tariff Committee, Regional Councils and
the Sectional Committees and all books of account or documents thereof; and liabilities
shall be deemed to include all debts liabilities and obligations of whatever kind existing
and appertaining to the work of the Tariff Committee, the Regional Councils and their
Sectional Committees.
(3) Where the General Insurance Council has established a provident or
superannuation fund or any other fund for the benefit of the employees of its Tariff
Committee or Regional Councils and constituted a trust in respect therefor (hereafter
in this section referred to an existing trust), the monies standing to the credit of any
62 of 1968. fund at the commencement of the Insurance (Amendment) Act, 1968, shall subject to
the provisions of sub-section (4), stand transferred to, and vest in, on such
commencement, the Advisory Committee.
(4) Where any employee of the Tariff Committee, or the Regional Councils, of the
General Insurance Council does not become an employee of the Adivsory Committee,
the monies and other assets appertaining to any fund referred to in sub-section (3)
shall be apportioned between the trustees of the fund and the Advisory Committee in
the prescribed manner; and in case of any dispute regarding such apportionment, the
decision of the Central Government thereon shall be final.
(5) The Advisory Committee shall, as soon as may be after the commencement of
62 of 1968. the Insurance (Amendment) Act, 1968, constitute in respect of the monies and other
assets which are transferred to, and vested in, it under sub-section (3), one or more
trusts having, as far as practicable, objects similar to the objects of the existing trust.
(6) Where all the monies and other assets belonging to an existing trust are
transferred to, and vested in, the Advisory Committee under sub-section (3), the trustees
62 of 1968. of such trust shall, on the commencement of the Insurance (Amendment) Act, 1968, be
discharged from the trust except as respects things done or omitted to be done by them
before such commencement.
64UG. (1) Unless otherwise expressly provided by or under this Act, all contracts, Contracts,
agreements and other instruments of whatever nature subsisting or having effect etc., to be
effective by
62 of 1968. immediately before the commencement of the Insurance (Amendment) Act, 1968, and
or against the
to which the Tariff Committee, or any Regional Council is a part or which is in favour of Advisory
the Committee or that Council, shall be of as full force and effect against or in favour of Committee.
the Advisory Commitee and may be enforced or acted upon as fully and effectually as
if, instead of the Tariff Committee, or the Regional Council, the Advisory Committee
had been a party thereto or as if they had been entered into or issued in favour of the
Advisory Committee.
118
(2) If, at the commencement of the Insurance (Amendment) Act, 1968, any suit, 62 of 1968.
appeal or other legal proceeding of whatever nature is pending by or against the Tariff
Committee, or any Regional Council then it shall not abate, be discontinued or in any
way be prejudicially effected by reason of the transfer to the Advisory Committee of
the assets and liabilities of the Tariff Committee, and the Regional Councils or of
anything done under this Act, but the suit, appeal or other proceeding may be continued
prosecuted or enforced by or against the Advisory Committee.
Employees, 64UH. (1) Every whole-time employee of the Tariff Committee, or the Regional
etc., to Councils who was employed by that Committee or those Councils wholly or mainly in
continue.
connection with its or their statutory duties immediately before the commencement of
the Insurance (Amendment) Act, 1968, shall, on and from such commencement, become 62 of 1968.
an employee of the Advisory Committee and shall hold his office in it by the same
tenure, at the same remuneration, and upon the same terms and conditions and with
the same rates and privileges as to pension, gratuity and other matters as he would
have held on such commencement if this Part and not been enacted, and shall continue
to do so until his employment under the Advisory Committee is terminated or until the
remuneration, terms and conditions, are duly altered by the Advisory Committee:
Provided that nothing contained in this sub-section shall apply to any employee
who has given notice to the Central Government in writing either prior to or within two
months from the commencement of the Insurance (Amendment) Act, 1968, intimating 62 of 1968.
his intention of not becoming an emplyee of the Advisory Committee.
(2) Where the Central Government is satisfied that for purpose of securing
uniformity in the scales of pay, remuneration and other terms and conditions of service
applicable to employees of the Tariff Committee, or the Regional Councils, it is necessary
so to do, or that a reduction in the remuneration payable or revision on the other terms
and conditions of service applicable to employees or any class of them is called for, the
Central Government may, notwithstanding anything contained in sub-section (1), or in
the Industrial Disputes Act, 1947, or in any other law for the time being in force in any 14 of 1947.
award, settlement, or agreement for the time being in force, alter (whether by way of
reduction or otherwise) the remuneration and other terms and conditions of service to
such extent and in such manner as it thinks fit; and if the alteration is not acceptable to
any employee, the Advisory Committee may terminate his employment by giving him
compensation equivalent to three month’ remuneration, unless the contract of service
with such employees provides for a shorter notice of termination.
Explanation.—The compensation payable to an employee under this sub-section
shall be in addition to, and shall not affect any pension, gratuity, provident fund money or
any other benefit to which the employee may be entitled under his contract of service.
(3) If any question arises as to whether any person was a whole-time employee
of the Tariff Committee, or the Regional Council, on the commencement of the Insurance
(Amendment) Act, 1968, or as to whether any employee was employed wholly or 62 of 1968.
mainly in connection with the statutory duties of the Tariff Committee, or any Regional
Council, immediately before such commencement, the question shall be referred to
the Central Government whose decision thereon shall be final.
(4) Notwithstanding anything contained in the Industrial Disputes Act, 1947, or 14 of 1947.
in any other law for the time being in force, the transfer of the services of any employees
of the Tariff Committee, or the Regional Councils, to the Advisory Committee, shall
not entitle any such employee to any compensation under that Act or other law, and no
such claim shall be enterained by any court, Tribunal or other authority.
Duty of person 64UI. (1) Where any property of the Tariff Committee, or the Regional Councils
having custody (appertaining to its or their statutory duties) has been transferred to, and vested in,
or control of
the Advisory Committee, then,—
property deliver
such property to (a) every person in whose possession, custody or control any such property
the Advisory
Committees.
may be, shall deliver the property to the Advisory Committee forthwith;
119
(b) any person, who, on the commencement of the Insurance (Amendment)

Act, 1968, has in his possession, custody or control any books, documents and
62 of 1968. other papers relating to the Tariff Committee, or the Regional Councils, shall be
liable to account for the said books, documents and papers to the Advisory
Committee and shall deliver them to the Advisory Committee or to such person
as the Committee may direct.
(2) Without prejudice to the provisions contained in this section, it shall be
lawful for the Advisory Committee to take all necessary steps for securing possession
of all properties which have been transferred to, and vested in, it under this Act.
64UJ. (1) The Advisory Committee may constitute such Regional Committees Power of
as and when it deems fit for one or more of the prescribed regions. Advisory
Committee to
(2) Each Regional Committee shall consist of not more than seven person of constitute
which not more than five shall be elected by such groups of insurers carrying on Regional
Committees.
general insurance business in the region as may be prescribed and not more than two
shall be nominated by the Authority.
(3) For the purpose of enabling it effectively to discharge its duties, any
Regional Committee may constitute such sub-committee as it may think fit, whether
consisting of members of the Regional Committee or not.
(4) It shall be the duty of every Regional Committee to advise the Advisory
Committee on any question connected with the fixation of rates. advantages, terms
and conditions for risks in its region which may be referred to it by the Advisory
Committee of advice, and in addition, every Regional Committee shall perform such
other functions as may be delegated to it by the Advisory Committee by regulations
made by it with the previous approval of the Central Government.
(5) Where, in the exercise of any functions delegated to it under this section,
any Regional Committee or any sub-committee thereof restrains an insurance agent
from procuring or causing to be procured general insurance business in any area,
such agent may prefer an appeal to the Authority against such order within thirty
days from the date of service of that order on him and the Authority may, after giving
such agent an opportunity of being heard, pass such orders thereon as it may think fit
and the orders made by the Authority on such appeal shall be final.
(6) Notwithstanding anything contained in this section, every Regional Council
and every Sectional or other Committee of such Regional Council, in existence
62 of 1968. immediately before the commencement of the Insurance (Amendment) Act, 1968,
shall, until it is abolished by the Advisory Committee, be deemed to be a Regional
Committee or sub-Committee as the case may be, established in accordance with the
provisions of this section and shall function as such and shall have all the powers and
responsibilities which it had immediately before such commencement, and if the term
of any such Council or Committee expires before Regional Committees constituted
under sub-section (1) and sub-committees constituted under sub-section (3) come
into existence, such terms shall be deemed to have been validly extended up to the
time when such Regional Committees and sub-committees are established.
64UK. (1) Every insurer shall annually before the prescribed date make payment Levy of fees
to the Advisory Committee in the prescribed manner of such fees, not exceeding for by Advisory
any year, in the case of an insurer doing only re-insurance business in Inda, one per Committee.
cent. of his total premiums in respect of facultative re-insurance accepted by him in
India in the preceding year and in the case of any other insurer, one per cent. of the
total gross premium written direct by him in India in the preceding year, as may be
specified by the Advisory Committee for the purpose of this Part.
(2) The Advisory Committee may collect, in addition to the fees mentioned in
sub-section (1), reasonable fees and charges from any person to cover the cost of any
specific services rendered by it.
120
(3) If an insurer fails to make payment within the prescribed date of any fee
required to be paid under sub-section (1) he shall be deemed to have failed to comply
with the provisions of this Act.
(4) The Authority may, so long as an application to the court under sub-section
(5D) of section 3 has not been made, revive the registration which might have been
cancelled for failure to make payment of the fee required to be made under sub-
section (1), if the insurer makes payment of such fee together with such penalty not
exceeding the actual amount of fee payable as the Authority may require.
Power to 64UL. If any difficulty arises in giving effect to the provisions of this Part, the
remove Central Government may, by order, make such provisions or give such directions not
difficulties. inconsistent with the provisions of this Act as may appear to it to be necessary or
expedient for the removal of the difficulty:
Provided that no such power shall be exercised after the expiry of a period of
vour years from the commencement of this Part.
Licensing of 64UM. (1) (A) Save as otherwise provided in this section, no person shall act as
surveyors and a surveyor or loss assessor in respect of general insurance business after the expiry of
loss assessors. a period of one year from the commencement of the Insurance (Amendment) Act, 1968, 62 of 1968.
unless he holds a valid licence issued to him by the Authority.
(B) Every person who intends to act as a surveyor, or loss assessor after the
expiry of a period of one year from the commencement of the Insurance (Amendment)
Act, 1968 but before the commencement of the Insurance Regulatory and Development 62 of 1968.
Authority Act, 1999 shall make an application to the Authority within such time, in 41 of 1999.
such form, in such manner and on payment of such fee, not exceeding rupees two
hundred and fifty, as may be prescribed.
(BA) Every person who intends to act as a surveyor or loss assessor after the
expiry of a period of one year from the commencement of the Insurance Regulatory and
Development Authority Act, 1999, shall make an application to the Authority within 41 of 1999.
such time, in such manner and on payment of such fee as may be determined by the
regulations made by the Authority:
Provided that any licence issued immediately before the commencement of the
Insurance Regulatory and Development Authority Act, 1999, shall be deemed to have 41 of 1999.
been issued in accordance with the regulations providing for such licence.
(C) Every licence issued under this section shall remain in force, unless cancelled
earlier, for a period a five years from the date of issue thereof, and may be renewed for
a period of five years at a time, on payment of such fee, not exceeding rupees two
hundred, as may be determined by the regulations.
(D) No licence to act as a surveyor or loss assessor shall be issued unless—
(i) the applicant, where he is an individual, satisfies the Authority that he—
(a) has been in practice as a surveyor or loss assessor on the date of
commencement of the Insurance Regulatory and Development Authority
Act, 1999, or 41 of 1999.
(b) holds a degree of a recognised University in any branch of

engineering, or
(c) is a fellow or associate member of the Institute of Chartered
Accountants of India or the Institute of Cost and Works Accountants of
India, or
(d) possesses actaurial qualifications or holds a degree or diploma
of any recognised University or Institute in relation to insurance, or
(e) holds a diploma in insurance granted or recognised by the
Government, or
121
(f) possesses such other technical qualifications as may be specified

by the regulations made by the Authority, and
(g) does not suffer from any of the disqualifications mentioned in
(ii) the applicant, where he is a company or firm, satisfies the Authority
that all his directors or partners, as the case may be, possess one or more of the
qualifications specified in clause (i) and none of such directors or partners suffer
from any of the disqualifications mentioned in sub-section (4) of section 42;
(E) Every application for the renewal of the licence shall be made at least thirty
days before the expiry of the period of validity thereof.
(F) The Authority may, if he is satisfied that any licence issued or renewed under
this section has been lost or destroyed, issue a duplicate licence on payment of a fee
of rupees five and the duplicate licence so issued shall remain in force for the remainder
of the period of validity of the licence in lieu of which it is issued.
(G) Without prejudice to the powers conferred by sub-section (7), the Authority,
if satisfied that the holder of any licence has made a statement which is false in material
particulars with regard to his eligibility for obtaining such licence or has, after the issue
or renewal of such licence, acquired any of the disqualifications mentioned in sub-
section (4) of section 42, may, after giving a reasonable opportunity to the holder of
such licence of being heard, by order cancel such licence and notify such cancellation
in the Official Gazette.
(1A) Every surveyor and loss assessor shall comply with the code of conduct in
respect of their duties, responsibilities and other professional requirements as may be
specified by the regulations made by the Authority.
(2) No claim in respect of a loss which has occurred in India and requiring to be
paid or settled in India equal to or exceeding twenty thousand rupees in value on any
policy of insurance, arising or intimated to an insurer at any time after the expiry of a
62 of 1968. period of one year from the commencement of the Insurance (Amendment) Act, 1968,
shall, unless otherwise directed by the Authority, be admitted for payment or settled
by the insurer unless he has obtained a report, on the loss that has occurred, from a
person who holds a licence issued under this section to act as a surveyor or loss
assessor (hereafter referred to as "approved surveyor or loss assessor"):
Provided that nothing in this sub-section shall be deemed to take away or abridge
the right of the insurer to pay or settle any claim at any amount different from the
amount assessed by the approved surveyor or loss asessor.
(3) The Authority may, at any time, in respect of any claim of the nature referred
to in sub-section (2), call for an independent report from any other approved surveyor
or loss assessor specified by him and such surveyor or loss assessor shall furnish
such report to the Authority within such time as may be specified by the Authority or
if no time limit has been specified by it within a reasonable time and the cost of,
incidental to such report shall be borne by the insurzer.
(4) The Authority may, on receipt of a report referred to in sub-section (3), issue
such directions as it may consider necessary with regard to the settlement of the claim
including any direction to settle a claim at a figure less than, or more than, that at which
it is proposed to settle it or it was settled and the insurer shall be bound to comply with
such directions:
Provided that where the Authority issues a direction for settling a claim at a
figure lower than that at which it has already been settled, the insurer shall be deemed
to comply with such directions, if he satisfies the Authority that all reasonable steps,
with due regard to the question whether the expenditure involved is not disproportionate
to the amount required to be recovered, have been taken with due despatch by him:
122
Provided further that no direction for the payment of a lesser sum shall be made
where the amount of the claim has already been paid and the Authority is of opinion
that the recovery of the amount paid in excess would cause undue hardship to the
insured:
Provided also that nothing in this section shall relieve the insurer from any
liability, civil or criminal, to which he would have been subject but for the provisions of
this sub-section.
(5) No insurer shall, after the expiry of a period of one year from the
commencement of the Insurance (Amendment) Act, 1968, pay to any person any fee or 62 of 1968.
remuneration for surveying, verifying or reporting on a claim of loss under a policy of
insurance unless the person making such survey, verification or report is an approved
surveyor or loss assessor.
(6) Where, in the case of a claim of less than twenty thousand reupees in value
on any policy of insurance it is not practicable for an insurer to employ an
approved.surveyor or loss assessor without incurring expenses disproportionate to
the amount of the claim, the insurer may employ any other person (not being a person
disqualified for the time being for being employed as a surveyor or loss assessor) for
surveying such loss and may pay such reasonable fee or remuneration to the person
so employed as he may think fit.
(7) If the Authority is satisfied that an approved survey or loss assessor has
been guilty of wilfully making a false statement knowing it to be false or of being
knowingly a partly to the settlment of a claim in a fraudulent manner, he may, after
giving such surveyor or loss assessor an opportunity of being heard, cancel the
licence issued to him with effect from such date as may be specified by him and shall
notify such cancellation in the Official Gazette.
(8) Any surveyor or loss assessor whose licence has been cancelled shall not be
eligible for having a licence to act as a surveyor or loss assessor for a period of three
years from the date on which the cancellation is notified in the Official Gazette.
(9) The Authority may, in respect of any claim of value of less than twenty
thousand rupees on an insurance policy, if the claim has not been or is not proposed
to be reported upon by a surveyor or loss assessor, direct that such claim shall be
reported upon by an approved surveyor, or loss assessor and where the Authority
makes such direction, the provisions of sub-sections (3) and (4) shall apply in respect
of such claim.
(10) Where, in relation to any class of claims, the Authority is satisfied that it is
customary to entrust the work of survey or loss assessment to any person other than
a licensed surveyor or loss assessor, or it is not practicable to make any survey or loss
assessment, it may, by an order published in the Official Gazette, exempt such class of
claims from the operation of this section.
PART IIC
SOLVENCY MARGIN, ADVANCE PAYMENT OF PREMIUM AND RESTRICTIONS ON THE OPENING
OF A NEW PLACE OF BUSINESS
Assets and 64V. (1) For the purpose of ascertaining complaince with the provisions of section
liabilities how 64VA,—
to be valued.
(i) assets shall be valued at values not exceeding their market or realisable
value and the assets hereafter mentioned shall be excluded to the extent indicated,
namely:—
(a) agents’ balances and outstanding premiums in India, to the extent
they are not realised within a period of thirty days;
(b) agents' balances and outstanding permium outside India, to the extent
they are not realisable;
(c) sundry debts, to the extent they are not realisable;
(d) advances of an unrealisable character;
123
(e) furniture, fixtures, dead stock and stationery;

(f) deferred expenses;
(g) profit and loss appropriation account balance and any fictitious
assets other than pre-paid expenses;
(h) such other asset or assets as may be specified by the regulations
made in this behalf;
(ii) a proper value shall be placed on every item of liability and liabilities in
respect of share capital, general reserve and other reserves of similar nature not
created to meet specific liabilities and investment reserve, reserve for bad and
doubtful debts, and depreciation fund shall be excluded and liabilities thereafter
mentioned shall be included to the extent indicated, namely:—
(a) provision for dividends declared or recommended, and
outstanding dividends in full;
(b) reserves for unexpired risks in respect of—
(i) fire and miscellaneous business, 50 per cent.
(ii) marine cargo business, 50 per cent. and
(iii) marine full business, 100 per cent.,
of the premium, net of re-insurances, during the preceding twelve months;
(c) estimated liability in respect of outstanding claims, in full;
(d) amount due to insurance companies carrying on insurance
business, in full;
(e) amounts due to sundry creditors, in full;
(f) provision for taxation, in full;
(g) such other liability which may be made in this behalf to be included
for the purpose of clause (ii).
Explanation.—In case of an insurer whose principal place of business or domicile
is outside India, where, in the accounts filed with the public authority of the country in
which the insurer is constituted, incorporated or domiciled, in respect of marine
insurance business, the provisions for unexpired risks and outstanding claims are not
shown separately, the liabilities under items (b) and (c) of clause (ii) in respect of
marine insurance business shall be taken together at a figure of not less than the total
permium less re-insurance in respect of that class of business during the preceding
twelve months.
(2) Every insurer shall furnish to the Authority with his returns under section 15
or section 16; as the case may be, a statement certified by an auditor approved by the
Authority in respect of general insurance business, or an actuary approved by the
Authority in respect of life insurance business, as the case may be, of his assets and
liabilities assessed in the manner required by this section as on the 31st day of March
of the preceding year.
(3) Every insurer shall value his assets and liabilities in the manner required by
this section and in accordance with the regulations which may be made by the Authority
in this behalf.
64VA. (I) An insurer shall, at all times before the commencement of the Insurance Sufficiency of
41 of 1999. Regulatory and Development Authority Act, 1999, maintain an excess of the value of assets.
his assets over the amount of his liabilities of not less than the amount arrived at as
follows (hereafter in this section referred to as the "relevant amount"), namely:—
(i) in the case of an insurer whose total premium income less re-insurances
in respect of general insurance business (hereafter in this sub-section referred
124
to as the "said income") in the preceding twelve months did not exceed five
crores of rupees, one-fifth of the said income subject to a minimum of—
(a) five lakhs of rupees in the case of an insurer who is a co-operative
society registered under the Co-operative Societies Act, 1912, or any other 2 of 1912.
law for the time being in force in any State relating to co-operative societies, or
(b) ten lakhs of rupees in the case of any other insruer; and
(ii) in the case of an insurer whose said income in the preceding twelve
months exceeded five crores of rupees, the aggregate of one-fifth of the first five
crores of rupees of the said income and one-tenth of the amount by which the
said income in the preceding twelve months exceeded five crores of rupees:
Provided that where a number of insurers occupying the status of parent and
subsidiary companies prepare, under the laws of the country of origin of the parent
company, a consolidated balance sheet, the provisions of this sub-section shall apply
to such of them as are not members of any group as if they constituted a single insurer,
subject to the further condition that the relevant amount shall, in no case, be less than
a sum equal to—
(i) the number of such insurers multiplied by ten lakhs of rupees, or
(ii) where all the insurers are co-operative societies registered under the
Cooperative Societies Act, 1912, or any other law for the time being in force in 2 of 1912.
any State relating to co-operative societies, the number of such insurers multiplied
by five lakhs of rupees:
Provided further that if in respect of any insurer the Central Government is
satisfied that either by reason of an unfavourable claim experience or because of a
sharp increase in the volume of new business, or for any other reason, compliance with
the provisions of this sub-section would cause undue hardship to the insurer, it may
direct that for such period and subject to such conditions as it may specify, the
provisions of this sub-section shall apply to that insurer with the modification that
instead of the proportion of one-fifth, wherever mentioned in this sub-section, such
other proportion being not less than one-tenth as may be specified by that Government
shall be applicable to that insurer:
Provided also that in the case of an insurer carrying on insurance business at the
commencement of the Insurance (Amendment) Act, 1968, it shall be sufficient compliance 62 of 1968.
with the provisions of this sub-section until the 31st December, 1972 or until such
subsequent date, not being later than 31st December, 1976 as the Central Government
may, at its discretion, allow for any particular insurer, if the progressively brings up the
excess of the value of his assets over the amount of his liabilities, in such manner as may
be prescribed, to the relevant amount.
(1A) Every insurer shall, at all times, on or after the commencement of the
Insurance Regulatory and Development Authority Act, 1999, maintain an excess of the 41 of 1999.
value of his assets over the amount of his liabilities of not less than the amount arrived
at as follows (hereinafter to in this section as the "required solvency margin" namely:—
(i) in the case of an insurer carrying on life insurance business, the required
solvency margin shall be the higher of the following amounts—
(a) fifty crores of rupees (one hundred crores of rupees in case of re-
insurers); or
(b) the aggregate sums of the results arrived at in items (I) and (II) stated
below:—
(I) the aggregate of the results arrived at by applying the
calculation described in item (A) below (Step I) and the calculation
described in item (B) below (Step II):
(A) for Step 1—
(A.1) there shall be taken, a sum equal to a
percentage determined by the regulations not exceeding
125
five per cent. of the mathematical reserves for direct

business and re-insurance acceptances without any
deduction for re-insurance cessions;
(A.2) the amount of mathematical reserves at the
end of the preceding financial year after the deduction
of re-insurance cessions shall be expressed as a
percentage of the amount of those mathematical reserves
before any such deduction; and
(A.3) the sum mentioned in item (A.1) above shall
be multiplied—
(A.3.1) where the percentage arrived at
under item (A.2) above is greater than eighty-five
per cent. (or in the case of a re-insurer carrying on
exclusive re-insurance business, fifty per cent.) by
that greater percentage; and
(A.3.2) in any other case, by eighty-five per
cent. (or in the case of a re-insurer carrying on
exclusive re-insurance business, by fifity per cent.);
(B) for Step II·—
(B.1) there shall be taken, a sum equal to a
percentage determined by the regulations made by the
Authority not exceeding one per cent. of the sum at risk
for the policies on which the sum at risk is not a negative
figure, and
(B. 2) the amount of sum at risk at the end of the
preceding financial year for policies on which the sum at
risk is not a negative figure after the deduction of re-insurance
cession shall be expressed as a percentage of the amount
of that sum at risk before any such deduction, and
(B. 3) the sum arrived at under item (B.1) above
shall be multiplied—
(B.3.1) where the percentage arrived at
under item (B.2) above is greater than fifty per
cent. by that greater percentage; and
(B.3.2) in any other case by fifty per cent.
(II) a percentage determined by the regulations made by the
Authority of the value of assets determined in accordance with the
provisions of section 64V;
(ii) in the case of an insurer carrying on general insurance business, the
required solvency margin, shall be the highest of the following amounts:—
(a) fifty crores of rupees (one hundred crores of rupees in case of re-
insurer); or
(b) a sum equivalent to twenty per cent. of net premium income; or
(c) a sum equivalent to thirty per cent. of net incurred claims.
subject to credit for re-insurance in computing net premiums and net incurred
claims being actual but a percentage, determined by the regulations not exceding
fifty per cent:
Provided that if in respect of any insurer, the Authority is satisfied that either by
reason of an unfavourable claim experience or because of sharp increase in the volume of
the business, or for any other reason, compliance with the provisions of this sub-section
would cause undue hardship to the insurer, the Authority may direct, for such period and
subject to such conditions, such solvency margin not being less than the lower of the
amount mentioned in sub-clause (i) or sub-clause (ii) above, as the case may be.
126
Explanation.— For the purpose of this sub-section, the expressions—

(i) "mathematical reserves" means the provision made by a insurer to
cover liabilities (excluding liabilities which have fallen due and liabilities arising
from deposit back arrangement in relation to any policy whereby an amount is
deposited by re-insurer with the cedant) arising under or in connection with
policies or contracts for life insurance business, Mathematical reserves also
include specific provision for adverse deviations of the bases, such as mortality
and morbidity rates interest valuation for this purpose;
(ii) "net incurred claims" means the average of the net incurred claims
during the specified period of not exceedding three preceding financial years;
(iii) "sum at risk", in relation to a life insurance policy, means a sum which is—
(a) in any case in which an amount is payable in consequence of
death other than a case falling within sub-clause (b) below, the amount
payable on death, and
(b) in any case in which the benefit under the policy in question
consists of the making, in consequence of death, of the payments of
annuity, payment of a sum by instalments or any other kind of periodic
payments, the present value of that benefit,
less in either case the mathematical reserves in respect of the relevant policies.
(2) An insurer who does not comply with the provisions of sub-section (1) shall
be deemed to be inslovent and may be wound up by the court
(2A) If, at any time an insurer does not maintain the required solvency margin in
accordance with the provisions of this section, he shall, in accordance with the directions
issued by the Authority, submit a financial plan, indicating a plan of action to correct
the deficiency to the Authority within a specified period not exceeding three months.
(2B) An insurer who has submitted a plan under sub-section (2A) to the Authority
shall propose modifications to the plan if the Authority considers it inadequate, and
shall give effect to any plan accepted by the Authority as adequate.
(2C) An insurer who does not comply with the provisions of sub-section (2A)
shall be deemed to be insolvent and may be wound up by the court.
(3) The Authority shall be entitled at any time to take such steps as he may
consider necessary for the inspection or verification of the assets and liabilities of any
insurer or for securing the particulars necessary to establish that the requirements of
this section have been complied with as on any date and the insurer shall comply with
any requisition made in this behalf by the Authority, and if he fails to do so within two
months from the receipts of the requisition, he shall be deemed to have made default in
complying with the requirements of this section.
(4) The provisions of this section shall not apply to an insurer, specified in sub-
clause (c) of clause (9) of section 2.
(5) In applying the provisions of sub-section (1) to any insurer, who is a member
of a group, the relevant amount for that insurer shall be an amount equal to that
proportion of the relevant amount which that group, if considered as a single insurer,
would have been required to maintain as the proportion of his share of the risk on each
policy issued by the group bears to the total risk on that policy:
Provided that when a group of insurers ceases to be a group, every insurer in
that group who continues to carry on any class of insurance business in India, shall
comply with the requirements of sub-section (1) as if he had not been an insurer in a
group at any time:
Provided further that it shall be sufficient compliance with the provisions of the
foregoing proviso if the insurer brings up the excess of the value of his assets over the
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amount of his liabilities to the required amount within a period of six months from the
date of cessation of the group:
Provided also that the Central Government may, on sufficient cause being shown,
extend the said period of six months by such further periods as it may think fit, so
however that the total period may not in any case exceed one year.
(6) The Central Government may, by notification in the Official Gazette, reduce
the sum of ten lakhs of rupees or five lakhs of rupees, as the case may be, referred to in
sub-section (1) to a lower figure not less than one hundred thousand rupees in respect
of a country craft insurer or in respect of an insurer not having a share capital and
carrying on only such insurance business as, in the opinion of the Central Government,
is not carried on ordinarily by insurers under separate policies.
(7) Every insurer shall furnish to the Authority his returns under section 15 or
section 16, as the case may be, in case of life insurance business a statement certified
by an actuary approved by the Authority, and in case of general insurance business a
statement certified by an auditor approved by the Authority, of the required solvency
margin maintained by the insurer in the manner required by sub-section (1A).
* * * * *
64VC. (1) No insurer shall, after the commencement of the Insurance (Amendment) Restrictions
62 of 1968. Act, 1968, open a new place of business in India or change otherwise than within the on opening of
same city, town or village, the location of an existing place of business situated in India a new place of
business.
without obtaining the prior permission of the Authority.
(2) The Authority may grant permission under sub-section (1) subject to such
conditions as it may think fit to imose either generally or with reference to any particular
case.
(3) Where, in the opinion of the Authority, an insurer has, at any time failed to
comply with any of the conditions imposed on him under this section, the Authority
may, by order in writing and after affording reasonable opportunity to the insurer for
showing cause against the action proposed to be taken against him, revoke any
permission granted under this section.
Explanation.—For the purposes of this section, "place of business" includes a
branch, a sub-branch, inspectorate, organisation office and any other office, by
whatever name called.
* * * * *
PART III
PROVIDENT SOCIETIES
65. (1) In this Part "provident society" means, a person who, or a body of persons Definition of
(whether corporate or unincorporate) which, not being an insurer registered for the time “provident
being under Part II of this Act, carries on the business of insuring the payment, on the society”.
happening of any of the contingencies mentioned in sub-section (2), of—
(a) an annuity of or equivalent to one hundred rupees or less payable for an
uncertain period, or
(b) a gross sum of one thousand rupees or less, whether paid or payable in a
lump sum or in two or more instalments over a certain period,
exclusively in both cases (a) and (b) of any profit or bonus not being a guaranteed profit or
bonus.
Explanation.—For the purposes of this sub-section, a period is "certain" if its duration
is ascertainable in advance and "uncertain" if its duration is not so ascertainable.
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(2) The contingencies referred to in sub-section (1) are the following, namely:—
(a) the birth, marriage or death of any person or the survival by a person of
a stated or implied age or contingency;
(b) failure of issue;
(c) the occurrence of a social, religious or other ceremonial occasion;
(d) loss of or retirement from employment;
(e) disablement in consequence of sickness or accident;
(f) the necessity of providing for the education of a dependent;
(g) any other contingency which may be prescribed or which may be
authorised by the State Government with the approval of the Central Government.
(3) For the purposes of sub-sections (1) and (2)—
(a) contracts entered into before the commencement of this Act shall not be
taken into account;
(b) two or more policies issued to one person shall, for the purposes of
determining whether the limits fixed by sub-section (1) have or have not been exceeded,
be deemed to be one policy if the contingencies on the happening of which the sums
are payable under the policies (whether the contingencies be the same of different)
relate to one person only, whether he be the policyholder or some other person.
(4) Every person or body of persons for the time being registered as a provident
society under the Provident Insurance Societies Act, 1912, and every person or body of 5 of 1912.
persons for the time being registered as a provident society under this Act shall be deemed
to be a provident society for all the purposes of this Act.
(5) If the question arises whether any person or body of persons is or is not a provident
society within the meaning of this section Authority shall decide the question and its decision
shall be final.
Prohibition of 65A. No person shall, after the commencement of the Insurance (Amendment) Act,
transaction fo 1950, begin to carry on in India any business specified in sub-section (1) of section 65, and 47 of 1950.
insurance
business by
no provident society carrying on any such business in India shall, after the expiry of one
provident year from such commencement, continue to carry on any such business, unless he or it is—
societies other
than public (a) a public company, or
companies or
co-operative
(b) a society registered under the Co-operative Societies Act, 1912 or under any 2 of 1912.
societies. other law for the time being in force in any State relating to Co-operative societies, or
(c) a body corporate incorporated under the law of any country outside India
not being of the nature of a private company.
Restrictions 66. No provident society shall undertake any form of insurance not falling within the
on provident limits fixed by sub-section (1) of section 65, nor shall any provident society be eligible to be
societies.
registered under section 3.
Name. 67. No provident society established after the commencement of this Act shall adopt
as its name, and no provident society established before the commencement of this Act shall
continue after the expiry of six months from the commencement thereof to use as its name,
any combination of words which fails to include the word "provident" or which includes the
word "life".
68. [Rep. by the Insurance (Amendment) Act, 1950, sec. 48 (w.e.f. 1-6.1950).] 47 of 1950.
Dividing 69. (1) No provident society shall carry on any business upon the dividing principle,
business. that is to say, on the principle that the benefit secured by a policy is not fixed but depends
either wholly or partly on the results of a distribution of certain sums amongst policies
129
becoming claims within certain time-limits, or on the principle that the premiums payable by
a policyholder depend wholly or partly on the number of policies becoming claims within
certain time-limits.
(2) The Authority shall, as soon as possible, take steps to have any provident society
which carries on business on dividing principle wound-up:
Provided that, where any such provident society in existence at the commencement of
this Act applies within three months of such commencement to the Authority for permission
to continue carrying on its business with a view meanwhile to reorganise its business in
accordance with the provisions of this Act, the Authority may at its discretion, with due
regard to the past history of the society, permit the society to continue business for a period
not exceeding two years from the date of receipt of such permission, so however that no new
business on the dividing principle is undertaken by the society.
13 of 1941. (3) Where after the commencement of the Insurance (Amendment) Act, 1941, a provident
society is to be wound-up in pursuance of this section, or where, whether before or after the
commencement of that Act, a provident society ceases to carry on business on the dividing
principle, the provisions of sub-section (2) and sub-section (3) of section 52 shall, so far as
may be, apply in like manner as they apply to an insurer ceasing to carry on business on the
dividing principle.
70. (1) No provident society except a provident society registered under the provisions Registration.
5 of 1912. of the Provident Insurance Societies Act, 1912, shall receive any premium or contribution
until it has obtained from the Authority, before the date of commencement of the Insurance
41 of 1999. Regulatory and Development Authority Act, 1999, a certificate of registration.
(2) Every application for registration shall be accompanied by—
(a) a certified copy of the rules of the society, and when the society is a company
7 of 1913. incorporated under the Indian Companies Act, 1913 or under the Indian Companies
6 of 1882. Act, 1882 or under the Indian Companies Act, 1866 or under any Act repealed thereby,
10 of 1866. a certified copy of the Memorandum and Articles of Association or where the society
is not such a company a certified copy of the deed of constitution of the society;
(b) the names and addresses of the proprietors or directors, and the managers of
the society, the full address of the registered office of the society, the full address of
the principle office of the society in India, the name of the manager at such office, and
the name and address of some one or more persons resident in India authorised to
accept any notice required to be served on the society;
(c) a certificate from the Reserve Bank of India that the initial deposit referred to
in section 73 has been made;
(d) a declaration verified by an affidavit made by the principal officer of the
society authorised in that behalf that the minimum working capital required by section
72, is available; and
(e) the receipt showing payment in the prescribed manner of the prescribed fee
for registration being not more than two hundred rupees.
(3) The Authority may refuse to issue a certificate of registration until he is satisfied
that the rules of the society comply with the provisions of this Act and that the society
complies with the provisions of sections 65A, 67 , 71, 72, 73, and 73A but if he is so satisfied
he shall register the society and its rules.
(4) The Authority may, after giving previous notice in writing in such manner as he
thinks fit specifying the grounds for the proposed cancellation, and allowing the society
concerned an apportunity of being heard, apply to the Court and obtain sanction for
cancellation of the registration made under this section or made under the provisions of the
5 of 1912. Provident Insurance Societies Act, 1912—
130
(a) if it is satisfied from the returns furnished under the provisions of this Act or
as the result of an inquiry made under section 87—
(i) that the society is insolvent or is likely to become so, or
(ii) that the business of the society is conducted fraudulently or not in
accordance with the rules thereof, or what it is in the interests of the policy
holders that the society should cease to carry on business, or
(c) if the society, having failed to comply with any requirement or having
contravened any provision of this Act, has continued such failure or contravention for
a period of one month after notice of such failure or contravention has been conveyed
to the society by the Authority:
Provided that the Authority may, if it thinks, fit, instead of applying for cancellation of
the registration under sub-clause (i) of clause (a) of this sub-section make a recommendation
to the court that the contracts of the society should be reduced in such manner and subject
to such conditions as he may indicate:
Provided further that the Authority may, without previous notice and without application
to the court for sanction,—
(a) cancel the registration of a provident society which has failed to have its
registration renewed, or
(aa) cancel the registration of a provident society if any deposit required by
section 73, has not been made, or
(b) cancel, on such terms and conditions as it think fit, the registration of any
provident society which applies to it for such cancellation if it is satisfied that the
society has ceased to carry on insurance business and that all its liabilities in respect
of insurance policies are either satisfied or otherwise provided for, or
(c) cancel the registration of a provident society if he has reason to believe that
any claim upon the society arising in India under any policy of insurance remains
unpaid for three months after final judgment in regular course of law.
(5) When a registration is cancelled the provident society shall not, after the cancellation
has taken effect, enter into any new contracts of insurance, but all rights and liabilities in
respect of contracts of insurance entered into by it before such cancellation takes effect
shall, subject to the provisions of section 88, continues as if the cancellation had not takes
place.
(6) Where a registration is cancelled under clause (b) of sub-section (4), or clause (c)
of the second proviso to that sub-section, or because the society has failed to have its
registration renewed, the Authority may at its discretion revive the registration of the provident
society, within six months from the date on which the cancellation took effect, makes the
deposits required by section 73 or satisfies the Authority that no claim upon it such as is
referred to in the said clause (c) remains unpaid or has had an application under sub-section
(3) of section 70A accepted, as the case may be, and complies with any directions which may
be given to it by the authority.
(7) The Authority may, on payment of the prescribed fee which shall not exceed five
rupees, issue a duplicate certificate of registration to replace a certificate lost, destroyed or
mutilated, or in any other case where it is of opinion that the issue of a duplicate certificate is
necessary.
Renewal of 70A. (1) Every provident society registered under this Act, or under the Provident
registration. Insurance Societies Act, 1912, shall have its registration renewed annually for each period of 5 of 1912.
twelve months after that ending on the 30th day of June, 1942.
(2) An application for the renewal of a registration shall be made by the society to the
Authority before the 30th day of June preceding the period for which renewal is sought, and
131
shall be accompained as provided in sub-section (3) by evidence of payment of the prescribed

fee which shall not exceed two hundred rupees but may vary according to the volume of
insurance business done by the society.
(3) The prescribed fee for the renewal of a registration for any year shall be paid into
the Reserve Bank of India, or where there is no office of that Bank, into the Imperial Bank of
India acting as the agent of that Bank, or into any Government treasury, and the receipt, shall
be sent along with the application for renewal of the registration.
(4) If a provident society fails to apply for renewal of registration before the date
specified in sub-section (2) the Authority may, so long as it has taken no action under
section 88 to have the society would-up, accept an application for renewal of registration on
receipt from the society of the fee payable with the applications and such penalty, not
exceeding the prescribed fee payable by the society, as he may require.
(5) The Authority shall, on being satisfied that the society has fulfilled the requirements
of this section, renew the registration and grant it a certificate of renewal of registration.
70B. (1) Every provident society registered under section 70 before the commencement Supplementary
13 of 1941. of the Insurance (Amendment) Act, 1941 shall, before the expiration of three months from the information
and reports of
commencement of the Insurance (Amendment) Act, 1941 furnished to the Authority such
alterations in
particulars in addition to those already supplied for the purpose of obtaining registration as particulars
are required by sub-section (2) of section 70 of this Act as amended by the Insurance furnished with
(Amendment) Act, 1941. application
for
(2) Every provident society registered under the provisions of the Provident Insurance registration.
5 of 1912. Societies Act, 1912, shall, before the expiration of three months from the commencement of
13 of 1941. the Insurance (Amendment) Act, 1941 furnished to the Authority so far as it has not already
done so the documents and information required by clauses (a) and (b) of sub-section (2) of
section 70 to accompany an application by a provident society for registration under the
section.
(3) When any alteration occurs or is made which affects any of the matters which are
required under the provisions of sub-section (2) of section 70 to accompany an application
by a provident society for registration under that section, or are to be furnished to the
Authority under this section, the provident society shall furnish forthwith to the Authority
full particulars duly authenticated of such alternation.
71. The provisions of sub-sections (2) and (3) of section 10, section 20, sub-section Certain
(1) of section 27, sections 27A, 28, 29, 31A, 31 B, 32, 46 and 53 shall apply to provident provisions of
Part II to
societies as they apply to insurers, and in such application references to shareholders of an apply to
insurer shall be constructed as references to members of a provident society and references provident
to section 7 or section 98 shall be constructed as refernces to section 73: societies.
Provided that a provident society may charge a fee not exceeding one rupee for supplying
a copy of any document referred to in sub-section (2) of section 20.
72. No provident socity shall be registered unless it has a paid-up capital sufficient to Working
provide as working capital a net sum of not less than five thousand rupees exclusive of Capital.
deposits made under this Act and exclusive in the case of a company of any expenses
incurred in connection with the formation of the company.
73. (1) Every provident society shall, if established before the commencment of this Deposits.
Act within one year from such commencement, or, if established a after the commencement
of this Act before the society applies for registration under section 70, deposit and keep
deposited with the Reserve Bank of India in one of the offices in India of the Bank, for and on
behalf of the Central Government, cash or approved securities acounting at the market value
of the securities of the date of deposit to five thsouand rupees, and shall thereafter make in
each calendar year a further deposit amounting to not less than one-fifth of the premium
income for the preceding calendar year as shown in the revenue account of the society
132
(including admission fees and other fees received by the society) untill the total amount so
deposited and kept in fifty thousand rupees.
(2) The provisions of sub-sections 8, 9, 9A, 9B and 10 of section 7 and of sub-section
(1) of section 8 and of section 9 shall apply to the deposits made under this section as they
apply to deposits made by an insurer.
Restriction on 73A. (1) A provident society shall not be registered by a name identical with that by
name of which an insurer or another provident society in existence is already registered, or so nearly
provident
society.
resembling that name as to be calculated to deceive, except when the provident society in
existence is in the course of being dissolved and signifies its consent, or the insurer in
existence signifies his consent, to Authority.
(2) If a provident society, through inadvertence or otherwise, is without such consent
as aforesaid registered by a name identical with that they by which an insurer or another
provident society already in existence is registered, or so nearly resembling it as to be
calculated to deceive, the first-mentioned society shall, if called upon to do so by the Authority
on the application of the insurer or the second-mentioned society, change its name within a
time to be fixed by the Authority:
Provided that nothing in this section shall apply to any provident society carrying on
business before the commencment of the Insurance (Amendment) Act, 1946. 6 of 1946.
Rules. 74. (1) Every provident society shall in its rules set forth—
(a) the name, the object and the location of the registered office of the Society;
(b) the contingencies or classes of contingency on the happening of which
money is to be paid;
(c) the conditions to be complied with before, and the payments to be made on,
admission to society;
(d) the rates of premium of contribution, and the periods for which or the times at
which premiums or contributions are payable;
(e) the maximum amount payable to a subscribe or policyholder;
(f) the nature and amounts of the benefits provided for by the society;
(g) the circumstances in which a bonus may be paid to a policyholder;
(h) the nature of the evidence required for the proof of the happening of any
contingency on which money is to be paid;
(i) the circumstances in which policies may be forfeited or renewed or the whole
or a part of the premiums paid on a policy may be returned, or surrender value of a
policy may be granted;
(j) the penalities for delay in paying or failure to pay premiums or contributions;
(k) the proportion of the annual income of society which may be disbursed on
and the provisions to be made for meeting the expenses of the management of the
society;
(l) the person or persons who or the authority which shall have power to invest
the funds of the society;
(m) the provisons for appointment of auditors and their remunerations;
(n) the procedure to be adopted in altering the rules of the society;
(o) unless these are provided for in the articles of association of a society which
is a company incorporated under the Indian Companies Act, 1913 or under the 7 of 1913.
133
6 of 1882. Indian Companies Act, 1882, or under the Indian Companies Act, 1866, or under any
10 of 1866. Act repealed thereby,—
(i) the mode of appointment and removal, the qualification and the powers
of a director, manager, secretary or other officer of the society;
(ii) the manner of raising additional capital; and
(iii) the provisions for the holding of general meetings of the members and
policy-holders and for the powers to be exercised and procedure to be followed
thereat; and
(p) such other matters as may be prescribed.
(2) Where the rules of any provident society registered under the Provident Insurance
5 of 1912. Societies Act, 1912 fail to comply with the expiry of twelve months from the commencement
of this Act amend the rules so as to comply with these provisions.
75. (1) No amendment of any rule of a provident society shall be valid until it has been Amendment
sent to the Authority and has been registered by it. of rules.
(2) The Authority on being satisfied that the proposed amendment is not contrary to
the provisions of this Act shall, unless it is of opinion that the amendment unfairly affects
the rights of existing members or policyholders of the society, issue to the society an
acknowledgement of the registration of the amended rule.
76. Every provident society shall on demand deliver free of cost to any member of the Supply of
society a copy of the rules of the society and to any person other than a member a copy of copy of rules.
such rules on the payment of a sum not exceeding one rupee.
77. Every provident society shall have in India a principal office (on the outside of Registered
which it shall keep displayed its name in a conspicuous position in legible characters) to office.
which all communications and notices may be addressed, and shall give notice to the
Authority of any change in the location thereof within twenty-eight days of its occurrence.
78. Where any notice, advertisement or other official publication of a provident society Publication of
contains a statement of the amount of the authorised capital of the society, the publication authorised
capital to
also contain a statement of the amount the capital which has been subscribed and the contain also
amount paid-up. subscribed and
paid-up
capital.
79. Every provident society shall keep at its principal office in India— Registers and
books.
(a) such registers in such form as may be prescribed;
(b) a cash-book in which shall be entered separately for each class of contingency
separately specified in section 65 all sums received and expended by the society and
the matters in respect of which the receipt or expenditure takes place;
(c) a ledger;
(d) a journal.
80. (1) Every provident society shall at the expiry of the calender year prepare a Revenue
revenue account and balance-sheet in the prescribed form verified in the prescribed manner, account,
balance-sheet
together with a report on the ganeral state of the society's affairs and shall cause the revenue
and annual
account and balance-sheet to be audited by an auditor shall so far as may be in the audit of statements.
a provident society have the powers of, exercise the functions vested in, and discharge the
duties and be subject to the liabilities imposed on, an auditor of companies by section 145 of
70 of 1913. the Indian Companies Act, 1913.
(2) Every provident society shall at the expiry of the calender year prepare with respect
to that year—
134
(a) a statement showing separately for each class of contingency separately

specified in section 65—
(i) the number of new policies effected, the total amount insured thereby
and the total premium income received in respect thereof and the number of
existing policies discontinued during the year with the total amount insured
thereby, and
(ii) the total amount of claims made and the total amount paid in satisfaction
thereof;
(b) a statement showing details of every insurance effected on a life other than
the life of the person insuring; and
(c) a statement showing the total amount paid as allowances to agents and
canvassers.
(3) Until the expiry of two years from the commencement of this Act this section and
section 73 shall apply to provident societies registered before the commencement of this Act
under the Provident Insurance Societies Act, 1912 as if the reference to the calender year 5 of 1912.
were a reference to either the financial year or the calender year.
Actuarial 81. (1) Every provident society shall once in every five years or at such shorter
report and intervals as may be laid down by the rules of the society cause an investigation to be made
abstract.
as at the last day of a calender year into its financial condition including the valuation of its
liabilities and assets by an actuary.
(2) The report of the actuary shall contain an abstract in which shall be stated—
(a) the general principal adopted in the valuation, including the method by
which the valuation age of lives was ascertained,
(b) the rate at each age of the mortality and any other factor assumed and the
annuity values used in valuation,
(c) the reserve values held against policies effected,
(d) the rate of interest assumed, and
(e) the provision made for expenses,
and shall have appended to it a certificate signed by a principal officer of the society that all
material necessary for proper valuation has been placed at the disposal of the actuary and
that full and accurate particulars of every policy under which there is a liability either actual
or contingent have been furnished to the actuary for the purpose of the investigation.
(3) If the actuary finds that the financial condition of the society is such that no
surplus exists for distribution as bonus to the policyholders, or as dividend to the share
holders, he shall state in his report whether in his opinion the society is insolvent and, if so,
whether it should be wound up or not, and the extent to which in his opinion existing
contracts should be modified or existing rates of premium should be adjusted to make good
the deficiency in the assets.
Submission of 82. (1) The revenue account and balance-sheet with the auditor's report thereon and
returns to the report on the general state of the society's affairs referred to in sub-section (1) of section
Authority.
80 shall be printed and four copies of these and of the statements referred to in sub-section
(2) of section 80, shall be furnished as returns to the Authority within six months from the
end of the period to which they relate.
(2) All the material necessary for the proper valuation of the liabilities of the society
under the provisions of section 81 shall be placed at the disposal of the actuary within three
months from the end of the period to which such material relates, and the report and abstract
referred to in section 81 shall be furnished as a return to the Authority within a further period
of three months:
135
Provided that the Central Government may in any case extend the time allowed by this
sub-section for the furnishing of such return by a period not exceeding three months.
(3) The provisions of sub-section (2) of section 15 relating to the copies therein
referred to shall apply to the returns referred to in sub-section (1) of this section, and the
provisions of section 17 shall apply to the accounts and balance-sheet of a provided society
7 of 1913. being a company incorporated under the Indian Companies Act, 1913, or under the
6 of 1882. Indian Companies Act, 1882, or under the Indian Companies Act, 1866 or under any Act
10 of 1866.
repealed thereby, as they apply to the accounts and balance-sheet of an insurer, and the
Authority may exercise, in respect of returns made by a provident society and in respect of
an investigation or valuation to which section 81 refers, the same powers as are exercisable
by it under section 21 and section 22, respectively, in the case of an insurer.
83. (1) Every provident society, registered after the commencement of this Act, shall Actuarial
cause every scheme of insurance which it proposes to put into operation, and every provident examination
of schemes.
society registered before the commencement of this Act under the provisions of the Provident
5 of 1912. Insurance Societies Act, 1912, shall cause any scheme which it proposes to put into operation
for the first time, after such commencement to be examined by an actuary, and shall not
receive any premium or contribution in connection with the scheme until the actuary has
certified that the rates, advantages, terms and conditions of the scheme are workable and
sound and such certificate has been forwarded to the Authority.
(2) The provisions of sub-section (1) shall apply to any alteration of a scheme already
in operation, but the Authority may, if it is of opinion that the alteration unfairly affects the
interests of existing policyholders, prohibit the alteration, and if he does so, the society shall
not put the altered scheme into operation, unless it first discharges to the satisfaction of the
Authority all its liabilities to those of the existing policyholders who dissent from the
alteration.
(3) Every provident society registered before the commencement of this Act under the
5 of 1912. provisions of the Provident Insurance Societies Act, 1912 shall, as soon as may be and in any
event before the expiry of six months from the commencement of this Act, submit all schemes
of insurance which the society has in operation at the commencement of this Act to examination
by an actuary and shall, before the expiration of six months from the commencement of the
13 of 1941. Insurance (Amendment) Act, 1941 send the report of the actuary thereon to the Authority.
(4) The report of the actuary shall state in respect of each scheme whether the rates,
advantages, terms and conditions are workable and sound and, where no actuarial report
such as is referred to in section 81 has been made with the two years preceding the examination,
the report shall also state whether the assets of the society are sufficient to meet its liabilities
under the existing schemes, and if not, how in the opinion of the actuary the existing contracts
should be modified.
(5) If the rates, advantages, terms and conditions of any scheme are not reported by
the actuary to be workable and sound, the Authority shall give notice to the society prohibiting
the scheme, and the society shall not after its receipt of such notice enter into any new
contract of insurance under the scheme, but all rights and liabilities in respect of contracts of
insurance entered into by the society before receipt of the notice shall, subject to the provisions
of sub-section (6), continue as if the notice has not been given.
(6) Where a scheme is prohibited under the provisions of sub-section (5) the society
shall, where its assets are sufficient to meet all existing liabilities, set apart out its assets the
sum sufficient in the opinion of the actuary to meet the liabilities incurred under the scheme
so prohibited and where its assets are not so sufficient, within three months from the date of
the Prohibition, apply to the court for a modification of its existing contracts or failing such
modification for the winding-up of the society.
84. Where a provident society effects policies of insurance in connection with more Separation of
than one of the classes of contingency separately specified in sub-section (2) of section 65, accounts and
the receipts and payments in respect of each such class shall be recorded in a separate funds.
account in the cash-book kept in accordance with section 79.
136
Investment 85. (1) * * * * *

funds.
(2) No funds or investments of a provident society except a deposit made under
section 73 or under the law of any state or country relating to insurance shall be kept
otherwise than in the name of the society for in the name of a public officer approved by the
Central Government.
(3) No loan shall be made out of the assets of a provident society to any director,
manager, managing agent, auditor, actuary, officer or partner of the society, except on the
security of a policy of insurance held in the society and within its surrender value and no
such loans shall be made to any concern of which a director, manager, managing agent,
actuary, officer or partner of the society is a director, manager, managing agent, actuary,
officer or partner:
Provided that nothing in this sub-section shall apply to loans made by a provident
society to a banking company:
Provided further that where any event occurs giving rise to circumstances, the existence
of which at the time of the grant of any subsisting loan would have made such grant a
contravention of this sub-section, such loan shall, notwithstanding any contract to the
contrary, be repaid within three months from the occurrence of such event or from the
commencement of the Insurance (Amendment) Act, 1946 whichever is later; and in case of 6 of 1946.
default, the director, manager, auditor, actuary or partner concerned shall without prejudice
to any other penalty which he may incur, ceases to hold office in the society on the expiry of
the said three months.
(3A) Any loan prohibited under sub-section (3), made before and outstanding at the
commencement of the Insurance (Amendment) Act, 1940 shall be repaid before the 1st day of 20 of 1940.
January, 1941, and in case of default the director, manager, managing agent, auditor, actuary,
officer or partner who has received the loan or is connected with the concern which has
received the loan, as the case may be, shall cease to hold office in or be partner of the society
and shall be ineligible to hold office in or to be a partner of the society until the loan is repaid.
(4) Any director, manager, managing agent, auditor, actuary, officer or partner, of a
society which contravences the provisions of sub-section (3), who is knowingly a party to
the contravention, shall without prejudice to any other penalty which he may incur be jointly
and severally liable to the society for the amount of the loan, and such amount, together with
interest from the date of the loan at such rate not exceeding twelve per cent, per annum as the
Authority may fix, shall on application by the Authority to any Civil Court of competent
jurisdiction be recoverable by execution as if a decree for such amount had been passed by
that court.
(5) The provisions of section 86D of the Indian Companies Act, 1913 shall not apply to 7 of 1913.
a loan granted to a director of a provident society being a company if the loan is one granted
on the security of a policy on which the society bears the risk and the policy was issued to
the director on his own life and the loan is within the surrender value of the policy.
Inspection of 86. The books of every provident society shall at all reasonable times be open to
books. inspection by the Authority or any person appointed by it in this behalf by any member or
policyholder of the society who has, on application in this behalf, been permitted by the
Authority, subject to such condition, if any, as it impose, to make such inspection.
Inquiry by or 87. (1) The Authority shall at least once in two years and may, if it thinks fit, at any time
on behalf of visit personally or depute a suitable person to visit the principal office of a provident society
Authority.
or the principal office in India of a society having its principal place of business or domicile
outside India and inquire into the affairs of the society, or may, after giving notice to the
society any giving it an opportunity to be head, direct such an inquiry to be made by an
auditor or actuary appointed by it or by both an auditor and an actuary appointed
simultaneously, or first by an auditor only or an actuary only and afterwards by an actuary or
auditor.
137
(2) For the purposes of any such inquiry the Authority or the auditor or actuary, at the
case may be, shall be entitled to examine all books and documents of the society and may
demand from the society or any officer of the society such explanations as he may require
on any matter relating to the affairs of the society.
(3) The results of any such inquiry shall be recorded in writing by the person making
the inquiry, and four copies of the record shall be supplied to the Authority and when the
inquiry is completed, a copy of the record, or of each such record where more than one are
made in the course of the same inquiry, shall be sent by the Authority to the society concerned
and shall be open to inspection by any member or policyholder of the society.
(4) All expenses of an incidental to any inquiry made by an auditor or actuary under
sub-section (1) including any expenses incurred before the date on which the Authority
receives notice of an appeal under clause (e) of sub-section (1) of section 110 shall be
defrayed by the provident society, shall have priority over other debts due from the society,
and shall be recoverable as an arrear of land revenue.
(5) The Authority may by notice in writing require the provident society to comply
within a time to be specified therein (not being less than fifteen days from the receipt of the
notice by the society) with any directions he may issue to remedy defects disclosed by an
inquiry under this section.
(6) If the society fails to comply with any directions issued under sub-section (5), the
Authority may, after giving notice to the society and giving it an opportunity to be heard,
apply to the Court for the winding up of the society.
87A. (1) The insurance business of a provident society may be transferred to any Amalgamation
person or transferred to or amalgamated with the insurance business of any other provident and transfer
of insurance
society in accordance with a scheme prepared under this section and sanctioned by the business.
Authority.
(2) Any scheme prepared under this section shall set out the agreement under which
the transfer or amalgamation is proposed to be effect, and shall contain such further provisions
as may be necessary for giving effect to the scheme.
(3) Before an application is made to the Authority to sanction any such scheme, notice
of the intention to make the application together with a statement of the nature of the
amalgamation or transfer, as the case may be, and of the reason therefor, shall at least two
months before the application is made, be sent to the Authority and certified copies, four in
number, of each of the following documents shall be furnished to him and other such copies
shall during the two months aforesaid, be kept open for the inspection of the members and
policyholders at the principal and branch offices of the provident societies concerned,
namely:—
(a) a draft of the agreement or deed under which it is proposed to effect the
amalgamation or transfer,
(b) balance-sheets in respect of the insurance business of each of the provident
societies concerned in such amalgamation or transfer,
(c) actuarial reports and abstracts in respect of the insurance business of each of
the provident societies so concerned,
(d) a report on the proposed amalgamation or transfer prepared by an independent
actuary,
(e) any other reports on which the scheme of amalgamation or transfer was founded.
and the balance-sheets, reports and abstracts referred to in clauses (b), (c) and (d) shall be
prepared as at the date at which the amalgamation or transfer if sanctioned by the Authority
is to take effect, which date shall not be more than twelve months before the date on which
the application to the Authority is made under this section:
138
Provided that the Authority may exempt the provident society or societies concerned
from furnishing to him and from keeping open for inspection any one or more of the above
documents.
(4) When any application such as is referred to in sub-section (3) is made to the
Authority he may require, if for special reasons he so directs, notice of the application to be
sent to every person resident in India who is the holder of a policy of any provident society
concerned and may cause a statement of the nature and terms of the amalgamation or
transfer, as the case may be, to be published in such manner and for such periods as he may
direct, and after hearing the societies concerned, such policyholders as apply to be heard
and such other persons as he may deem fit, may sanction the arrangement, if he is satisfied
that no sufficient objection to the arrangement has been established and shall make such
consequential orders as are necessary to give effect to the arranagement, including orders as
to the disposal of any deposit made under section 73:
Provided that—
(a) no part of the deposit made by any party to the amalgamation or transfer shall
be returned except where, after effect is given to the arrangement the whole of the
deposit to be made by the provident society carrying on the amalgamated business or
the person to whom the business is transferred is completed;
(b) only so much shall be returned as is no longer required to complete the
deposit last mentioned in clause (a);
(c) while the deposit last mentioned in clause (a) remains uncompleted, no
accession, resulting from the arrangement, to the amount already deposited by the
provident society carrying on the amalgamated business or the person to whom the
business is transferred shall be appropriated as payment or part payment of any
instalment of deposit subsequently due from it or him under section 73.
(5) A copy of the order under sub-section (4) sanctioning or refusing to sanction the
arrangement shall be sent to each of the societies concerned and to each of the policy
holders who applied to be heard.
(6) If the scheme involves a reduction of the amount of the insurance and other
contracts of the transfer or society or of any or all of the societies concerned in the
amalgamation, the Authority may sanction the scheme, reducing the amount of such contracts
upon such terms and subject to such conditions as he may think proper, and the reduction of
the contracts as sanctioned by the Authority shall be valid and binding on all the parties
concerned.
Winding up by 88. (1) The court may order the winding up of a provident society being a company
court and incorporated under the Indian Companies Act, 1913 or under the Indian Companies Act, 1882 7 of 1913.
voluntary
winding up.
or under the Indian Companies Act, 1866 or under any Act repealed thereby and the provisions 6 of 1882.
of the Indian Companies Act, 1913 shall subject to the provisions of this Part, apply accordingly. 10 of 1866.
(2) In addition to the grounds on which such an order may be based, the court may
order the winding up of a provident society if the Authority, who is hereby authorised to do
so, applies in this behalf to the court on any of the following grounds, namely:—
(a) that the resignation of the society has been cancelled under sub-section (4)
of section 70;
(b) that it appears from the returns furnished under the provisions of this Act or
as the result of an inquiry made under section 87 that the society is insolvent;
(c) that the continuance of the society is prejudicial to the interests of the policy
holders.
(3) A provident society being a company incorporated under the Indian Companies
Act, 1913 or under the Indian Companies Act, 1882 or under the Indian Companies Act, 7 of 1913.
6 of 1882.
139
10 of 1866. 1866 or under any Act repealed thereby may be wound up voluntarily in accordance with the
7 of 1913. provisions of the Indian Companies Act, 1913 but shall not be so wound up except for the
purpose of effecting an amalgamation or reconstruction of the society or on the ground that
by reason of its liabilities it cannot continue its business.
(4) A provident society not being a company incorporated under the Indian Companies
7 of 1913. Act, 1913 or under the Indian Companies Act, 1882 or under the Indian Companies Act, 1866
6 of 1882. or under any Act repealed thereby, may be wound up voluntarily under this Act, if a resolution
10 of 1866.
is passed by proprietors that the society should be wound up voluntarily for the purpose or
on the ground specified in sub-section (3), and the Authority may, in any case where he has
ordered the cancellation of the registration of a society under sub-section (4) of section 70,
order the winding up of the society under this Act.
89. The court may make an order reducing the amount of the insurance contracts of a Reduction of
provident society upon such terms and subject to such conditions as the court think just— Insurance
contracts.
(a) if the Authority as an alternative to cancelling the registration of a society
under sub-section (4) of section 70 applies to the court in this behalf;
(b) if while a society is in liquidation the court thinks fit;
(c) if when a society has been proved to be insolvent, the court thinks fit to do
so in place of making an order for the winding up of the society; or
(d) if the court is satisfied on an application made in this behalf by the society
supported by the report of an actuary, and after giving the policyholders an opportunity
to be heard that it is desirable to do so.
90. (1) Where a provident society is to be wound up whether under the Indian Appointment
7 of 1913. Companies Act, 1913 or under this Act, the society shall, within seven days from the date of of liquidator.
the order of the court ordering the winding up or the passing of the resolution authorising
the winding up, as the case may be, give notice thereof to the Authority, and, except where
the winding up is done by an order of the Court, the Authority shall appoint the liquidator
and shall determine the remuneration to be paid to him:
Provident that if the Authority is not satisfied that the assets of the society are sufficient
to meet the costs of liquidation including the remuneration of the liquidator, he may decline
to make such appointment, and in such a case the society shall itself appoint a liquidator who
shall carry out the liquidation as if the winding up was being done by an order of the court.
(2) Any liquidator appointed by the Authority under sub-section (1) may be removed
by the Authority if satisfied that the duties entrusted to him are not being properly discharged.
90A. Notwithstanding anything to the contrary contained in the Indian Companies Application
7 of 1913. Act, 1913 the provisions of sections 91, 92 and 93 shall apply to any liquidator appointed to of Act to
liquidators.
wind up a provident society, whether by the court, the Authority or the society itself.
91. (1) A liquidator appointed to wind up a society shall have power— Powers of
liquidator.
(a) to institute or defend any legal proceedings on behalf of the society by his
name of office;
(b) to determine the contribution to be made by members of the society
respectively to the assets of the society;
(c) to investigate all claims against the society and to decide questions of priority
arising between claimants;
(d) to determine by what persons and in what proportion the costs of the
liquidation including the remuneration of the liquidator and any expenses incurred
under clause (g) of this sub-section are to be borne;
140
(e) to give such directions in regard to the collection and distribution of the
assets of the society as may appear to him to be necessary for winding up the affairs
of the society;
(f) to summon, and enforce the attendance of, witnesses and to compel the
production of documents by the same means and as far as may be in the same manner
as is provided in the case of a Civil Court by the Code of Civil Procedure, 1908; 5 of 1908.
(g) with the sanction of the Authority to employ such establishment and to
obtain such assistance from an actuary or an auditor as may be necessary for the
discharge of his duties;
(h) to sell the immovable and movable property of the society by public auction
or private contract, with power to transfer the whole thereof to any person or society
or to sell the same in parcels.
(2) The liquidator shall, for settling the list of contributories and realising the amount
of contributions, have the same powers as an official liquidator appointed by the court for
the winding up of the company under the Indian Companies Act, 1913. 7 of 1913.
Procedure at 92. (1) As soon as a liquidator is appointed to wind up a society he shall take charge
liquidation. of all property movable or imovable of the society and of all its books and documents.
(2) If any proprietor or officer of the society or any other persons retains any portion
of the assets of the society or fails to deliver to the liquidator any book or document when so
required by the liquidator, he shall be punishable with imprisonment which may extend to six
months, or with fine which may extend to five hundred rupees, or with both, and the court
may order the delivery of the assets or book or document to the liquidator.
(3) The liquidator shall within fifteen days of his appointment send notice by post to
all persons who appear to him to be creditors of the society that a meeting of the creditors of
society will be held on a date not being less than twenty-one or more than twenty-eight days
after his appointment, and at a place and hour to be specified in the notice, and shall advertise
notice of the meeting once in the local Official Gazette and once at least in two newspapers
circulating in the State in which the society is situated.
(4) At the meeting so held the creditors shall determine whether an application shall be
made for the appointment of any person as liquidator in the place of or jointly with the
liquidator already appointed, or for the appointment of a committee of inspection, and if they
so resolve and an application accordingly is made at any time not later than fourteen days
after the date of the meeting by any creditor appointed for the purposes at the meeting, the
Authority may, if it thinks fit, appoint a suitable person in place of or jointly with the
liquidator already appointed, and, determine the remuneration to be paid to him and if he
considers it desirable, may also appoint a committee of inspection.
(5) The committee of inspection shall, subject to any prescribed conditions have a
general power of supervision over the acts of the liquidator and shall have the right to
inspect his accounts at all reasonable times.
(6) The liquidator shall, with such assistance from an actuary as may be required,
ascertain as soon as practicable the amount of the society's liabiality to every person appearing
by the society's books to be entitled to or interested in any policy issued by the society, and
shall give notice of the amount so found to each such person in the prescribed manner and
each such person on receiving such notice shall be bound by the value so ascertained.
(7) The liquidator shall make a valuation of the assets of the society and an estimate of
the costs of the winding up, and shall on the basis of these settle the list of contributories.
(8) The liquidator shall apply to the Authority for an order for the return of the deposit
made by the society under section 73 and the Authority shall on such application order the
return of the deposit subject to such terms and conditions as he may think fit.
141
(9) In administering and distributing the assets of the society the liquidator shall have
regard to any directions that may be given by the creditors or contributories at a general
meeting or by the Authority.
(10) The liquidator shall keep books of account in which he shall record the proceedings
at all meetings attended by him, all amounts received or expended by him and any other
matter that may be prescribed, and these books may, with the sanction of the Authority be
inspected by any creditor or contributory.
(11) If the winding up continues for more than a year the liquidator shall summon a
meeting of the creditors and contributories at the end of the first year and of each succeeding
year, and shall lay before them an account of his acts and dealings and of the conduct of the
winding up, and that account together with any views expressed thereon by the meeting
shall be forwarded by the liquidator within one week after the meeting to the Authority.
(12) So far as is not otherwise provided herein or is not otherwise prescribed under
this Act, the liquidator shall so far as practicable follow the procedure to be followed by an
official liquidator appointed by the court for the winding up of a company under the Indian
7 of 1913. Companies Act, 1913.
(13) The costs of the liquidation including the remuneration of the liquidator and any
expenses incurred under clause (g) of sub-section (1) of section 91 or shall, if the liquidator
decides that they shall be payable of the assests of the society, be payable in priority to all
other claims.
93. (1) As soon as the affairs of a provident society are fully wound up the liquidator Dissolution of
shall prepare an account of the winding up showing how the winding up has been conducted provident
society.
and the property of the society has been disposed of and shall call a meeting of the members,
creditors and contributories for the purpose of laying before it the account and giving any
explanation thereof.
(2) Notice of the meetings shall be sent to each person individually and shall be
advertised in the local Oficial Gazette and in at least two newspapers circulating in the State
in which the society is situated.
(3) Within on week after the meeting of the liquidator shall send to the Authority a
copy of the account and shall report to the holding of the meeting and its date and shall
forward to it a copy of the proceedings of the meeting.
(4) The Authority may return the account to the liquidator if it is incomplete or
unsatisfactory and may require the liquidator to carry out any further steps necessary to
complete the winding up and the liquidator shall comply with such requirement and shall
submit a further report to the Authority within six months.
(5) If the Authority is satisfied that the affairs of the society have been fully wound up
he shall register the account of the liquidator who shall fothwith make over to the Authority
sums, if any, remaining undisposed if; and on the expiry of three months from the registering
of the account the Authority shall declare the society dissolved and cause the dissolution of
the society to be notified in the local Official Gazette, and the liquidator shall thereupon be
discharged from further responsibility.
(6) If within a period of five from the date on which any sums have been made over the
the Authority under sub-section (5) an order of a court of competent jurisdication has not
been obtained at the instance of any claimant to such sums for their disposal, the said sums
shall become the property of Government.
Nominations 94. (1) The provisions of section 38 and section 39 relating to assignment, transfer
and and nomination in the case of life insurance policies shall, subject to the provisions of this
assignments.
section, apply to policies of insurance issued by any provident society covering any of the
contingencies specified in clause (a) of sub-section (2) of section 65.
142
PART III A
INSURANCE CO-OPERATIVE SOCIETIES
Insurance co- 94A. (1) Every insurance co-operative society shall be deemed to be an insurer for the
operative purposes of this Act.
society to be
an insurer. (2) Save as otherwise provided in this Act, all the provisions applicable to an insurer
being an Indian insurance company shall, so far as may be, apply to an insurance co-
operative society:
Provided that the Authority may, by notification, direct that any of the provisions of
this Act,—
(a) shall not apply to any insurance co-operative society; or
(b) shall apply to any insurance co-operative society only with such exceptions,
modifications and adaptations as may be specified in the notification.
(3) A copy of every notification proposed to be issued under proviso to sub-section
(2), shall be laid in draft before each House of Parliament, while it is in session, for a total
period of thirty days which may be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in disapproving the issue of the notification
of both Houses agree in making any modification in the notification shall not be issued or, as
the case may be, shall be issued only in such modified form as may be agreed upon by both
the Houses.
PART IV
MUTUAL INSURANCE COMPANIES AND CO-OPERATIVE
LIFE INSURANCE SOCIETIES
Definitions. 95. (1) In this Part, before the date of commencement of the Insurance Regulatory and
Development Authority Act, 1999— 41 of 1999.
(a) "Mutual Insurance Company" means an insurer, being a company

incorporated under the Indian Companies Act, 1913 or under the Indian Companies 7 of 1913.
Act, 1882, or under the Indian Companies Act, 1866, or under any Act, repealed thereby, 6 of 1882.
which has no share capital and of which by its constitution only and all policyholders 10 of 1866.
are members; and
(b) "Co-operative Life Insurance Society" means an insurer being a society
registered under the co-operative Societies Act, 1912, or under an Act of a State, 2 of 1912.
Legislature governing the registration of co-operative societies which carries on the
business of life insurance and which has no share capital on which divident or bonus
is payable and of which by its constitution only original members on whose application
the society is registered and all policy-holders are members:
Provided that any Co-operative Life Insurance Society in existence at the commencement
of this Act shall be allowed a period of one year to comply of this Act.
(2) Notwithstanding anything contained in sub-section (1), other co-operative societies
may be admitted as members of a Co-operative Life Insurance Society, without being eligible
to any dividend, profit or bonus.
(3) A State Government may, subject to any rules made by the Central Government,
empower the registrar of co-operative societies of the state to register co-operative societies
for the insurance of cattle or crops or both under the provisions of the Co-operative Societies
Act in force in the State.
(4) A State Government may make rules not inconsistent with any rules made by the
Central Government to govern such societies, and the provisions of this act, in so far as they
are inconsistent with those rules, shall not apply to such societies.
143
96. The provisions of sections 6 and 7 and of sub-section (2) of section 20, so far as Application
those provisions are inconsistent with the provisions of this Part, shall not apply, and the of Act to
Mutual
provisions of this Part shall apply, to Co-operative Life Insurance Societies. Insurance
Companies
and Co-
operative Life
Insurance
Societies.
97. No co-operative life insurance society registered after the 26th day of January 1937 Working
2 of 1912. under the Co-operative Societies Act, 1912, or under an act of a state Legislature governing capital of
Mutual
the registration of co-operative societies shall be registered under this act, unless it has as Insurance
working capital a sum of fifteen thousand rupees, exclusive of the deposit to be made before Companies
or at the time of application for registration in accordance with sub-section (2) of section 98 and Co-
of this act and of the preliminary expenses, if any, incurred in the formation of the company operative Life
Insurance
or society. Societies.
98. (1) Every Co-operative Life Insurance Society shall, in respect of the life insurance Deposits to be
business carried on by it in the states deposit and keep deposited with one of the offices in made by
Mutual
India of the Reserve bank of India, for and on behalf of the Central Government, a sum of two
Insurance
hundred thousand rupees in cash or in approved securities estimated at the market value of Companies
the securities on the day of deposit. and Co-
operative Life
The deposit referred to in sub-section (I), may be made in instalments, of which the Insurance
first shall be a payment, made before or at the time the application for registration under this Societies.
Act is made of not less than twenty-five thousand rupees or such sum as with any deposit
previously made by the insurer under the provisions of the Indian Life Insurance Companies
6 of 1912. Act, 1912, brings the amount deposited up to not less than twenty-five thousand rupees and
the subsequent instalments shall be annual instalments made before the expiry of each
subsequent calendar year of an amount in cash or in approved securities estimated at the
market value of the securities on the day of payment of the instalment, equal to not less than
one-third of the premium income in the preceding calendar year as shown in the revenue
account.
(3) The provisions of sub-section (7) of section 7 shall apply in respect of a Co-
operative Life Insurance Society as if for the words 'under the foregoing provisions of this
section' the words and figures 'under the provisions of section 98' were substituted.
98A. The provisions of section 29 shall apply to Co-operative Life Insurance Societies Prohibition of
as they apply to other insurers. loans.
99. No transferee or assignee of a policy issued by an insurer to whom this Part applies Transferees
shall become a member of a Mutual Insurance Company or a Co-operative Life Insurance and assignees
of policies not
Society merely by reason of any such transfer or assignment. to become
members.
100. Notwithstanding the provisions of section 79 and section 131 of the Indian Publication of
7 of 1913. Companies Act, 1913, a Mutual Insurance Company or a Co-operative Life Insurance Society notices and
documents of
may, instead of sending the notices and the copies of the balance-sheet, revenue account Mutual
and other documents which they are required to send to the members under those sections, Insurance
publish such notice together with a summary in the prescribed form of the balance-sheet and Companies
revenue account once in a newspaper published in the English language and in newspaper and Co-
operative Life
published in an Indian language circulating in the place where the principal office of the Insurance
company is situated: Societies.
Provided that, where any members of the company are domiciled in a State other than
that in which the principal office of the company is situated, publication of the notice of the
meetings shall be made in a newspaper or newspapers published in the principal languages
of that State and circulating therein and any member of the company domiciled in that State
144
shall be entitled on application to the company to receive from it a copy of the balance-sheet
and revenue account.
Supply of 101. Every Mutual Insurance company and every Co-operative Life Insurance Society
documents to shall, on the application of any member made within two years from the date on which any
members.
such document is furnished to the Registrar of companies under the provisions of section
134 of the Indian Companies Act, 1937, or to the Registrar of Co-operative Societies of the 7 of 1913.
State in which the Co-operative Life Insurance Society is registered, furnish a copy of the
document free of cost to the member within fourteen days of the application.
* * * * *
PART V
MISCELLANEOUS
Penalty for 102. if any person, who is required under this Act, or rules or regulations made
default in thereunder,—
complying
with, or act in (a) to furnish any document, statement, account, return or report to the Authority,
contravention fails to furnish the same; or
of this Act.
(b) to comply with the directions, fails to comply with such directions;
(c) to maintain solvency margin, fails to maintain such solvency margin;
(d) to comply with the directions on the insurance treaties, fails to comply with
such directions on the insurance treaties,
he shall be liable to a penalty not exceeding five lakh rupees for each such failure and
punishable with fine.
Penalty for 103. If a person makes a statement, or furnishes any document, statement, account
carrying on return or which is false and which he either knows or believes to be false or does not believe
insurance
business in
to be true,—
contravention (a) he shall be liable to penalty not exceeding five lakh rupees for each such
of sections 3,
7 and 98. failure, and
(b) he shall be punishable with imprisonment which may extend to three years or
with fine for each such failure.
Penalty for 104. If a person fails to comply with the provisions of section 27 or section 27A or
false section 27B or section 27C or section 27D, he shall be liable to a penalty not exceeding five
statement in
document.
lakh rupees for each such failure.
Wrongfully 105. If any director, managing director, manager or other officer or employees of an
obtaining or insurer wrongfully obtains prossession of any property or wrongfully applies to any purpose
withholding
property.
of the Act, he shall be liable to a penalty not exceeding two lakh rupees for each such failure.
* * * * *
Penalty for 105B. If an insurer fails to comply with the provisions of section 32B, he shall be liable
failure to to a penalty not exceeding five lakh rupees for each such failure and shall be punishable with
comply with
imprisonment which may extend to three years or with fine for each such failure.
section 32B.
Penalty for 105C. If an insurer fails to comply with the provisions of section 32C, he shall be liable
failure to to a penalty not exceeding twenty-five lakh rupees for each such failure and in the case of
comply with
section 32C.
subsequent and continuing failure, the registration granted to such insurer under section 3
shall be cancelled by the authority.
* * * * *
Notice to an 106A. (1) * * * * *
hearing of
Authority.
145
(2) The orders to which this section applies are the following, namely:—
(a) an order for the attachment in execution of a decree of any deposit made
under section 7 or section 98;
(b) an order under section 9 or section 59 for the return of any such deposit;
* * * * *
(f) an order under section 89 reducing the amount of the insurance contracts of
a provident society.
107. (1) Except where proceedings are instituted by the Authority or an Administrator Previous
appointed under section 52A no proceedings under this Act against an insurer or any sanction of
Advocate-
director, managing agent, manager, secretary or other officer of an insurer or any liquidator or General for
any employee or agent of an insurer or any person who is liable under sub-section (2) of institution of
section 41 or any other person shall be instituted by any person unless he has previous proceedings.
thereto obtained the sanction of the Advocate-General of the State where the principal place
of business in India of such insurer is situate to the institution of such proceedings:
Provided that where the principal place of business of such insurer is situated in a
Union territory references in this section to the Advocate-General of the Province shall be
construed as references to the Attorney-General for India.
(2) This section shall apply in respect of a provident society as defined in Part III as it
applies in respect of an insurer.
107A. Every whole-time chairman, whole-time director, auditor, liquidator, manager Chairman,
and any other employee of insurer shall be deemed to be a public servant for the purposes of etc., to be
public
45 of 1860. Chapter IX of the Indian Penal Code. servants.
* * * * *
109. (1) No court inferior to that of a Presidency Magistrate or a Magistrate of the first Cognizance of
class shall try any offence under this Act. offences.
(2) No court shall take congnizance of any offence punishable under sub-section of
section 34B or sub-section (1A) of section 102 except upon complaint in writing made by an
officer of the Central Government generally or specially authorised in writing, in this behalf
by the Authority and no Court inferior to that of a Presidency Magistrate or a Magistrate of
the first class shall try any such offence.
110. (1) An appeal shall lie to the court having jurisdiction from any of the following Appeals.
orders, namely:—
(a) an order under section 3 cancelling the registration of an insurer;
(b) an order under section 5 directing the insurer to change his name;
(c) an order under section 42 cancelling the licence issued to an agent;
(d) an order under section 75 refusing to register an amendment of rules;
(e) an order under section 87 or section 87A;
(f) an order made in the course of the winding up or insolvency of a provident
society.
(2) The court having jurisdiction for the purposes of sub-section (1) shall be the
principal court of civil jurisdiction within whose local limits the principal place of business of
the insurer concerned is situate.
(3) An appeal shall lie from any order made under sub-section (1) to the authority
authorised to hear appeals from the decisions of the court making the same and the decision
on such appeal shall be final.
146
(4) No appeal under this section shall be entertained unless it is made before the
expiration of four months from the date on which the order appealed against was communicated
to the appellant.
* * * * *
Sections 3A, 110E. Notwithstanding anything contained in the Life Insurance Corporation Act,
27B, 28B, 33, 1956, the provisions of sections 3A, 27B, 28B, 33, 34A, clause (a) of sections 34E, 34F, 40C, 31 of 1956.
etc. to apply
to general
44A, 64U to 64UM (both inclusive), 64V, 64VA, 64VB, 64VC, 101C, 110D, 110G and 110H, shall
insurance also apply, so far as may be, to and in relation to the general insurance business carried on by
business of the the Life Insurance Corporation of India and the provisions of section 37A shall also apply to
Life Insurance that Corporation if it becomes an acquiring insurer.
Corporation
of India. * * * * *
Constitution 110G. (1) The Central Government shall constitute a Consultative Committee consisting
of of the Chairperson of the Authority (who shall be the Chairman thereof) and not more than
Consultative
Committee. four other members having special knowledge and experience of the business of insurance.
(2) The term of office of, and the allowances payable to the members of the Consultative
Committee, the procedure to be followed by, and the quorum necessary for the transaction of
business of, the Consultative Committee and the manner of filing casual vacancies therein
shall be such as may be prescribed.
(3) Before making any order under sections 34, 34A, 34B, 34C, 34E, 34F, 34G, sub-
sections (4) and (7) of section 64UM and section 64VC, the Chairperson of the Authority
shall consult the Consultative Committee constituted under sub-section (1).
Appeals. 110H. (1) Any person aggrieved by any order made by the Authority under sections
27D, 34A, 34B, 34C, 34E, 34F, 34G, sub-section (1), (4) and (7) of section 64UM or section
64VC may, within a period of thirty days from the date of such order prefer an appeal against
such order to the Central Government and that Government may, by order, confirm, modify or
reverse the order made by the Authority and the order so made by the Government shall be
final.
(2) No claim for compensation shall lie in favour of any person for anything done in
pursuance of an order of the Authority so long as such order was effective.
(3) The Central Government may, on the application of an appellant, stay, until the
decision of the appeal, the operation of any order made under section 34 or sub-section (5)
of section 34B or sub-clause (v) of clause (b) of section 34E.
Service of 111. (1) Any process or notice required to be served on an insurer or provident society
notices.
shall be sufficiently served if addressed to any person registered with the Authority as a
person authorised to accept notices on behalf of the insurer of provident society and left at,
or sent by registered post to the address of such person as registered with the Authority.
(2) Any notice or other document which is by this Act required to be sent to any
policy-holder may be addressed and sent to the person to whom notices respecting such
policy are usually sent and any notice so addressed and sent shall be deemed to be notice to
the holder of such policy:
Provided that, where any person claiming to be interested in a policy as transferee,
asignee or nominee has given to an insurer or to a provident society notice in writing of his
interest, any notice which is by this Act required to be sent to policy-holders shall also be
sent to such person at the address specified by him in his notice.
* * * * *
Acquisition of 113. (1) A policy of life insrance under which the whole of the benefits become payable
surrender either on the occurrence, or at a fixed interval or fixed intervals after the occurrence, of a
values by
policy.
contingency which is bound to happen, shall, if all premiums have been paid for at least three
consecutive years in the case of a policy issued by an insurer, or five years in the case of a
147
policy issued by a provident society as defined in Part III, acquire a guaranteed surrender
value, to which shall be added the surrender value of any subsisting bonus already attached
to the policy, and every such policy issued by an insurer shall show the guaranteed surrender
value of the policy at the close of each year after the second year of its currency or at the
close of each period of three years throughout the currency of the policy:
Provided that the requirements of this sub-section as to the addition of the surrender
value of the bonus attaching to a policy at surrender shall be deemed to have been complied
with where the method of calculation of the guaranteed surrender value of the policy makes
provisions for the surrender value of the bonus attaching to the policy:
Provided further that the requirements of this sub-section as to the showing of the
guaranteed surrender value on a policy shall be deemed to have been complied with where
the insurer shows on the policy the guaranteed surrender value of the policy by means of a
formula accepted in this behalf by the Authority as satisfying the said requirements:
Provided further that the provisions of this sub-section as to the showing of the
guaranteed surrender value on a policy shall not take effect until after the expiry of six
months from such date as the Authority may, by notification in the Official Gazette appoint in
this behalf.
(2) Notwithstanding any contract to the contrary, a policy which has acquired a surrender
value shall not lapse by reason of the non-payment of further premiums but shall be kept
alive to the extent of paid-up sum insured, and the paid-up sum insured shall for the purposes
of this sub-section include in full all subsisting reversionary bonuses that have already
attached to the policy, and shall, where the policy is one on which the maximum number of
annual premiums payable is fixed and the premiums are of uniform amount, before the inclusion
of such bonuses not less than the amount bearing to the total sum insured by the policy
exclusive of bonuses the same proportion as the total period for which premium have already
been paid bears to the maximum period for which premiums were originally payable.
(3) A policy kept alive to the extent of the paid-up sum insured under sub-section (2)
shall not be entitled by virtue of that sub-section to participate in any profits declared
distributable after the conversion of the policy into a paid-up policy.
(4) Sub-section (2) and sub-section (3) shall not apply—
(a) where the paid-up sum insured by a policy, being a policy issued by an
insurer, is less than one hundred rupees inclusive of any attached bonus, or takes the
form of any annuity of less than twenty-five rupees, or where the paid-up sum insured
by a policy, being a policy issued by a provident society, as defined in Part III, is less
than fifty rupees inclusive of any attached bonus or takes the form of an annuity of
less than twenty-five rupees, or
(b) where the parties after the default has occurred in the payment of the premium
agree in writing to some other arrangement, or
(c) to policies in which the surrender value is automatically applied under the
terms of the contract to maintaining the policy in force after its lapse through non-
payment of premium.
114. (1) * * * * * Power of
Central
(2) In particular and without prejudice to the generality of the foregoing power, such Government
rules may prescribe— to make rules.
(aa) such other percentage of paid-up equity capital in excess of twenty-six per
cent of the paid-up equity capital and the period within which such excess paid-up
equity capital shall be divested under sub-section (1) of section 6AA;
* * * * *
148
(c) the procedure to be followed by the Reserve Bank of India in dealing with
deposits made in pursuance of this Act, including the reciept of, custody of, withdrawal
of, and payment of interest on securities lodged as such deposits, and their inspection
and verification by the Authority.
* * * * *
(f) the matters to be prescribed for the purposes of section 48;
(3) Every rule made under this section or under sub-section (10) of section 34H or
under sub-section (1) of section 64UB and every regulation made under sub-section (3) of
section 64UB and every regulation made under this Part shall be laid, as soon as may be after
it is made, before each House of Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or more successive sessions, and if,
before the expiry of the session immediately following the session or the successive sessions
aforesaid, both Houses agree in making any modification in the rule or regulation or both
Houses agree that the rule or regulation should not be made, the rule or regulation shall
thereafter have effect only in such modified form or be of no effect, as the case may be; so,
however, that any such modification or annulment shall be without prejudice to the validity
of anything previously done under that rule or regulation.
* * * * *
Power of 114A. (1) * * * * *
Authority to
make (2) In particular, and without prejudice to the generality of the foregoing power, such
regulations. regulations may provide for all or any of the following matters namely:—
(a) the qualifications to be possed by actuaries;
(aa) the maters including fee relating to the registration of insurers under section 3;
* * * * *
(d) the matters relating to the renewal of registration and fee therefore under
section 3A;
(e) the manner and procedure for divesting excess share capital under sub-
section (2) of section 6AA;
(f) the preparation of balance-sheet, profit and loss account and a separate
account of receipts and payments and revenue account under sub-section (1A) of
section 11;
(g) the manner in which an abstract of the report of the actuary to be specified
under the fifth proviso to sub-section (1) of section 13;
(h) the form and manner in which the statement referred to in sub-section (4) of
section 13 shall be appended;
(i) the time, manner and other conditions of investment of assets held by an
insurer under sub-sections (1), (1A) and (2) of section 27D;
(ia) the form in which a return showing the investments made out of the controlled
fund shall be submited by an insurer carrying on life insurance business under sub-
section (2) of section 28A;
(ib) the form in which return showing all the changes that occurred in the
investments shall be submitted by an insurer carrying on life insurance business
under sub-section (2) of section 28A;
(ic) the form in which a return showing the investment made out of assets shall
be submitted by an insurer carrying on general insurance business under sub-section
(1) of section 28B;
149
(id) the form in which a return showing all the changes that occurred in the
investment shall be submitted by an insurer carrying on general insurance business
under sub-section (2) of section 28B;
(ie) the form of the statement and the sum to be specified under sub-section (2)
of section 31B;]
(j) the minimum information to be maintained by insurer in their books, the
manner in which such information should be maintained, the checks and other
verifications to be adopted by insurers in that connection and all other matters incidental
thereto under sub-section (8) of section 33;
(k) the manner for making an application, the manner and the fee for issue of a
licence to act as an insurance agent under sub-section (1) of section 42;
(l) the fee and the additional fee to be determined for renewal of licence of
insurance agent under sub-section (3) of section 42;
(m) the requisite qualifications and practical training to act as an insurance agent
under clause (e) of sub-section (4) of section 42;
(n) the passing of examination to act as an insurance agent under clause (f) of
(o) the code of conduct under clause (g) of sub-section (4) of section 42;
(p) the fee not exceeding rupees fifty for issue of duplicate licence under sub-
section (6) of section 42;
* * * * *
(va) the amount of commission, fee or as remuneration in any form not exceeding
thirty per cent to be paid or contract to be paid under sub-section (1) of section 42E;
(vb) the requirements of capital, form of business and other conditions to act as
an intermediary or insurance intermediary under sub-section (z) of section 42E;
(w) such matters as specified under sub-section (2) of section 64UB relating to
the Tariff Advisory Committee;
(x) the matters relating to licensing of surveyors and loss assessors, their duties,
responsibilities and other professional requirements under section 64UM;
(y) such other asset or assets as may be specified under clause (h) of sub-
section (1) of section 64V for the purposes of ascertaining sufficiency of assets under
section 64VA;
(za) the matters specified under sub-section (1A) of section 64VA relating to
sufficiency of assets;
THE FIFTH SCHEDULE
(See section 13)
REGULATIONS FOR PREPARING STATEMENTS OF BUSINESS IN FORCE AND REQUIREMENTS
APPLICABLE TO SUCH STATEMENTS
PART I
REGULATIONS
1. Statements prepared under this Schedule must be prepared, so far as practicable, in
tabular form and must be identified by numbers and letters corresponding with those of the
paragraphs of Part II of this Schedule.
2. Except with respect to rates of premium or contribution, items in statements prepared
under this Schedule are to be shown to the nearest rupee.
150
3. Extra premium shown in the Forms of Summary and Valuation prepared under the
Fourth Schedule to this Act must not be included in statements prepared under this Schedule.
4. Every Statement prepared under this Schedule shall be signed by the actuary making
the investigation in connection with which it is prepared.
5. For the purposes of this schedule the following expressions have the meanings
hereby respectively assigned to them, namely:—
(a) "annual loading" means the provision made for future expenses and profits;
(b) "extra premiums" means a charge for any risk not provided for in the minimum
contract premium;
(c) "net premiums" means the premiums taken credit for in the valuation in
connection with which any statement is prepared; and
(d) "valuation date" means as respects any valuation the date as at which the
valuation is made.
PART II
REQUIREMENTS FOR STATEMENTS APPLICABLE TO LIFE INSURANCE
The statements required to be prepared under this Part of this Schedule are as follows,
namely:—
1. Statements, separately prepared in respect of policies with and without participation
in profits, showing:—
(a) as respects policies for the whole term of life, the rates of office premiums
charged, in accordance with the published tables in use, for new policies giving the
rates for decennial ages at entry from 20 to 70 inclusive; and
(b) as respects endowment insurance policies, the rates of office premiums charged,
in accordance with the published tables in use, for new policies with original terms of ten,
fifteen, twenty, thirty and forty years, giving the rates for decennial ages at entry from 20
to 40 inclusive, but excluding policies under which the age at maturity exceeds 60.
2. Statements, separately prepared in respect of policies with immediate profits, with
deferred profits, with profits under discounted bonus systems, and without profits, showing
in quinquennial groups—
(a) as respects policies for the whole term of life—
(i) the total amount assured (specifying sums assured and reversionary
bonuses separately), grouped according to ages attained;
(ii) the amount per annum, after deducting abatements made by application
of bonus, of office premiums payable throughout life, and of the corresponding
net premiums, grouped according to ages attained; and
(iii) the amount per annum, after deducting abatements made by application
of bonus, of office premiums payable for a limited number of years and, either the
corresponding net premiums grouped in accordance with the grouping adopted
for the purposes of the valuation, or, the annual loading reserved for the remaining
duration of the policies, grouped according to ages attained.
(b) as respects endowment insurance policies—
(i) the total amount assured (specifying sums assured and reversionary
bonuses separately), grouped in according with the grouping adopted for the
purposes of the valuation; and
(ii) the amount per annum, after deducting abatements made by application
of bonus, of office premiums payable and of the corresponding net premiums,
grouped in accordance with the grouping adopted for the purposes of the
valuation:
151
Provided that—
(a) as respects endowment insurance policies which will reach maturity in less
than five years, the information required by sub-paragraph (b) (i) of this paragraph
must be given for each year instead of in quinquennial groups; and
(b) where the office premiums payable under policies for the whole term of life for
a limited number of years, or the office premiums paybale under endowment insurance
policies, or the corresponding net premiums, are grouped for the purposes of the
valuation otherwise than according to the number of years' payments remaining to be
made, or where the sums assured under endowment insurance policies are grouped for
the purposes of the valuation otherwise than according to the years in which the
policies will mature for payment or in which they are assumed to mature if earlier than
the true year, then, in any such case the valuation constants and an explanation of the
method by which they are calculated must be given for each group, and in the case of
the sums assured under endowment insurance policies a statement must also be given
of the amount assured maturing for payment in each of the two years following the
valuation date.
3. Statements as respects any policies in force under which premiums cease to be
payable, whether permanently or temporarily during disability arising for sickness or accident,
showing the total amount of the office premiums payable.
4. Statements as respects immediate annuities on single lives for the whole term of life,
separately prepared in respect of annuities on male and female lives, showing in quinquennial
age groups the total amount of such annuities.
5. Statements as respects deferred annuities, separately prepared in respect of annuities
on male and female lives, showing the specimen reserve values for annuities of one hundred
rupees which will be produced on maturity on the basis of valuation adopted at ages, in the
case of male lives, 60 and 65, and in the case of female lives, 55 and 60; the said statements
must show the specimen reserve values which will be produced under the table of annual
premiums in use for new policies, and if under any other table of annual premiums in use for
any other deferred annuity policies in force smaller reserve values will be produced, the like
specimens of these must also be given.
6. Statements as respects any policies of insurance upon the lives of a group of
persons, whereby sums assured are payable in respect of the several persons included in
the group, showing the total claims paid since the date as at which the last statements were
prepared under this Part of this Schedule or, where no such statements have been prepared,
since the date on which the insurer began to carry on the class of business to which the
statements relate, and the reserve for unexpired and outstanding claims.
THE SIXTH SCHEDULE
PART A
[See section 42B(1)]
TERMS DEEMED TO BE INCLUDED IN EVERY CONTRACT BETWEEN
AN INSURER CARRYING ON GENERAL INSURANCE BUSINESS
AND A PRINCIPAL AGENT
1. All payments of commission to insurance agents shall be made by the principal

agent on behalf of the insurer.
2. The Principal agent shall procure or cause to be procured through insurance agents
such an amount of general insurance business of any class for the procurement of which he
has been appointed, as will yield a gross premium income of not less than twenty thousand
rupees in each calender year.
152
3. In the event of the principal agent failing in any calender year to comply with the
requirements of clause 2, the shall forfeit to the insurer—
(i) one-quarter of the total remuneration payable to him by the insurer for that
year, if the class of business for the procurement of which he has been appointed is
fire or miscellaneous insurance business, or
(ii) one-third of the total remuneration payable to him by the insurer for that year,
if the class of business for the procurement of which he has been appointed is marine
insurance business.
4. In the event of the principal agent failing to comply with the requirements of
clause 2 in any two successive calender years, the contract shall without prejudice to the
provisions of clause 3, terminate on the 31st day of March immediately following the second
calendar year.
5. Except in cases where the business relates to any property under his immediate
control, a principal agent shall not by himself procure any class of the general insurance
business without utilising the services of an insurance agent.
PART B
[See section 42C(1)]
TERMS DEEMED TO BE INCLUDED IN EVERY CONTRACT BETWEEN
AN I NSURER CARRYING ON LIFE I NSURANCE BUSINESS
AND A CHIEF AGENT
1. All payments of commission to insurance agents shall be made by the insurer direct
or by the chief agent, who may make the payment either directly or through a special agent
on behalf of the insurer.
2. The chief agent shall employ or cause to be employed for and on behalf of the
insurer either directly or through special agents at least six insurance agents in cases where
the business in force of the insurer is less than one crore of rupees and in any other case at
least twelve agents each of whom will procure in each calender year new business amounting
to not less than ten thousand rupees.
3. Save as provided in respect of cases specified in clause 7 of the part, the remuneration
payable to the chief agent in respect of life insurance business effected through him for the
insurer shall only be in the form of an overriding commission,
4. In the event of the chief agent failing in two successive calendar years to comply
with the requirements of clause 2, he shall forfeit to the insurer one-half of the total remuneration
payable to him by the insurer for those years.
5. In the event of the chief agent failing to comply with the requirements of clause 2 in
four successive calendar years, the contract shall, without prejudice to the provisions of
clause 4, terminate on the 31st day of March immediately following the last of such calendar
years.
6. Not more than one intermediary to be remunerated by the insurance concerned,
whether on a salary basis or by way of commission, shall be employed between the chief
agent and any insurance agent, but the chief agent may employ as many persons as he
thinks fit on a salary basis, provided such salaries are paid out of his overriding commission.
7. In cases where the commission payable on a policy of life insurance effected through
an insurance agent working under a chief agent is stopped on or after the 1st day of January,
1949 and not paid to the insurance agent, an amount not exceeding one-quarter of such
commission payble to the insurance agent concerned shall also be payble to the chief agent,
if he continues to render service in connection with that policy and if such commission is
otherwise payable to him.
153
PART C
[See section 42C(4)]
TERMS DEEMED TO BE INCLUDED IN EVERY CONTRACT BETWEEN AN INSURER
CARRYING ON LIFE INSURANCE BUSINESS AND A SPECIAL AGENT OR
BETWEEN A CHIEF AGENT AND A SPECIAL AGENT
1. All payments of commission to insurance agents shall be made by the insurer direct
or, on behalf of the insurer, either by the chief agent under whom the special agent is working
or by the special agent.
2. The special agent shall employ at least two insurance agents and shall procure or
cause to be procured through insurnace agents employed under him in each calendar year
new business amounting to not less than fifty thousand rupees assured on which at least the
first year's premiums have been paid in full.
3. In the event of the special agent failing in any calendar year to comply with the
requirements of clause 2, he shall forfeit to the insurer fifty per cent, of the total remuneration
payable to him by the insurer, or, as the case may be, by the chief agent, for that year.
4. In the event of the special agent failing to comply with the requirements of clause 2
in two successive calendar years, the contract shall, without prejudice to the provisions of
clause 3 of this Part terminate on the 31st day of March immediately following the second
calendar year.
5. In the event of the special agent procuring life insurance business without utilising
the services on an insurance agent, the special agent shall be entitled only to the commission
that is ordinarily payable in respect of business so procured to an insurance agent.
6. The remuneration payable to the special agent in repect of policies of life insurance
procured by him through insurance agents shall only be in the form of an overriding
commission.
Explanation.—In this Schedule "business in force" means the total sum assured with
bonuses, without taking into account reinsurances, ceded or accepted, by an insurer in
respect of the whole of the life insurance business on the woking day of the calendar year or
the period covered by the revenue account furnished by such insurer under clause (b) or
sub-section (2) of section 16, as the case may be, preceding the calendar year in question.
* * * * *
THE EIGHTH SCHEDULE
(See section 52J)
PRINCIPALES OF COMPENSATION
The compensation to be given under section 52J shall be an amount equal to the value
of the assets of the acquired insurer as on the day immediately before the appointed day,
computed in accordance with the provisions of Part I of this Schedule less the total amount
of liabilities thereof as on that day, computed in accordance with the provisions of Part II of
this Schedule.
PART I
ASSETS
For the purposes of this Part, "value of asset" means the total of the following:—
(a) the market value of any land or buildings;
(b) the market value of any securities, shares, debentures, bonds and other
investments, held by the acquired insurer.
154
Explanation.—For the purposes of this clause,—

(i) Securities of the Central Government, such as Post Office certificates
and Treasury Savings Deposits Certificates and any other securities or certificates
issued or to be issued under the Small Saving Scheme of the Central Government,
shall be valued at their encashable value as on the appointed day;
(ii) Where the market value of any Government security such as the
zamindari abolition bonds or other similar security, in respect of which the
principal is payble in instalments, is not ascertainable or is, for any reason, not
considered as reflecting the fair value thereo or as otherwise appropriate, the
security shall be valued at such an amount as is considered reasonable, having
regard to the instalments of principal and interest remaining to be paid, the
period during which such instalments are payable, the yield of any security,
issued by the Government to which the security pertains and having the same or
approximately the same maturity, and other relevant factors;
(iii) Where the market value of any security, share, debenture, bond of
other investment is not considered reasonable by reason of its having been
affected by abnormal factors, the investment may be valued on the basis of its
average market value over any reasonable period;
(iv) Where the market value of any security, share, debenture, bond or
other investment is not ascertainable, only such value, if any, shall be taken into
account as is considered reasonable, having regard to the financial position of
the issuing concern, the dividend paid by it during the preceding five years and
other relevant factors;
(c) the total amount of the premiums paid by the acquired insurer in respect of all
leasehold properties, reduced in the case of each such premium by an amount which
bears to such premium the same proportion as the expired term of the lease in respect
of which such premium shall have been paid bears to the total term of the lease;
(d) the written down value as per books, or the realisable value, as may be
considered reasonable, of all furniture, fixtures and fittings;
(e) the amount of debts due to the insurer, whether secured or unsecured, to the
extent to which they are reasonably considered to be recoverable;
(f) the amount of cash held by the insurer whether in deposit with a bank or
otherwise;
(g) the market or realisable value, as may be appropriate, of other assets appearing
on the books of the insurer, no value being allowed for capitalised expenses, such as
share selling commission, organisational expenses and brokerage, losses incurred and
similar other items.
PART II
LIABILITIES
The total amount of the liabilities of the insurer shall include—
(i) reserves for unexpired risks being in respect of each policy, such portion of
the last premium paid as is proportionate to the unexpired portion of the policy in
respect of which the premium was paid;
(ii) the total amount of all other liabilities of the insurer existing on the appointed
day, including all contingent liabilities which the Central Government of the acquiring
insurer may reasonably be expected to be required to meet out of its own resources on
or after the appointed day.
155
CERTAIN DIVIDENDS NOT TO BE TAKEN INTO ACCOUNT

No separate compensation shall be payable for any profits or any dividend in respect
of any period immediately preceding the appointed day, for which, in the ordinary course,
profits would have been transferred or dividend declared after the appointed day.
EXTRACT FROM THE GENERAL INSURANCE BUSINESS NATIONALISATION ACT, 1972
(57 OF 1972)
* * * * *
25. (1) No person shall take out or renew any policy of insurance in respect of any Properties in
property in India or any ship or other vessel or aircraft registered in India with an insurer India not to
be with
whose principal place of business is outside India save with the prior permission of the foreign insurer
Central Government. except with
permission of
(2) If any person contravenes any provision of sub-section (1), he shall be punishable Central
with imprisonment for a term which may extend to one year, or with fine which may extend to Government.
one thousand rupees, or with both.
* * * * *
EXTRACTS FROM THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT, 1999
(41 OF 1999)
* * * * *
2. (1) In this Act, unless the context otherwise requires,— Definitions.
* * * * *
(b) "Authority" means the Insurance Regulatory and Development Authority
established under sub-section (1) of section;
* * * * *
(f) "intermediary or insurance intermediary" includes insurance brokers,
reinsurance brokers, insurance consultants, surveyors and loss assessors;
* * * * *
CHAPTER II
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
3. (1) With effect from such date as the Central Government may, by notification, Establishment
appoint, there shall be established, for the purposes of this Act, an Authority to be called and
incorporation
"the Insurance Regulatory and Development Authority". of Authroity.
* * * * *
16. (1) There shall be constituted a fund to be called "the Insurance Regulatory and Constitution
Development Authority Fund" and there shall be credited thereto— of fund.
* * * * *
(c) the percentage of prescribed premium income received from the insurer.
* * * * *
LOK SABHA
————
BILL
further to amend the Insurance Act, 1938 and the General Insurance Business
(Nationalisation) Act, 1972 and to amend the Insurance Regulatory and
Development Authority Act, 1999 .
————
(Sh. Arun Jaitley, Minister of Finance)
GMGIPMRND—4585LS(S3)—20-02-2015.

Insurance Bill aims to amend key insurance laws

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Insurance Bill aims to amend key insurance laws

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AS INTRODUCED IN LOK SABHA

Bill No. 31 of 2015

THE INSURANCE LAWS (AMENDMENT) BILL, 2015

Amendment 3. In section 2 of the Insurance Act,—

(1A) ''Authority'' means the Insurance Regulatory and Development

(ii) clause (5A) shall be omitted; 10

'(7A) "Indian insurance company" means any insurer, being a company

(b) in which the aggregate holdings of equity shares by foreign

(b) a statutory body established by an Act of Parliament to carry on

5. Section 2E of the Insurance Act shall be omitted. Omission of

(iii) for sub-section (2C), the following sub-section shall be substituted,

(iv) sub-section (2D) shall be omitted;

(h) if the insurer makes a default in complying with, or acts in 35

(5) When the Authority suspends or cancels any registration under

insurance or re-insurance in India or after the commencement of the Insurance

(i) a paid-up equity capital of rupees one hundred crore, in case of a

entered including any change of beneficial owner declared to it within

15. In section 10 of the Insurance Act,— Amendment

(ii) in sub-section (2),—

Provided that the Authority may, having regard to the circumstances of

(2) Notwithstanding anything contained in sub-section (1) or sub-section (2) of

belonging to the promoters, subject to such conditions as may be specified by the

(a) any loans or temporary advances either on hypothecation of property

Omission of 33. Section 32 of the Insurance Act shall be omitted.

Omission of 40. Section 34G of the Insurance Act shall be omitted.

Amendment 41. In section 34H of the Insurance Act,—

"(b) balance sheets in respect of the insurance business of each of the

(4B) The compensation so assessed shall be paid to the shareholder or member

(11) In the case of the partial assignment or transfer of a policy of insurance

(3) The insurer shall furnish to the policyholder a written acknowledgment of

Limitation of "40B. No insurer shall, in respect of insurance business transacted by him in 20

(a) that the person is a minor;

Explanation.—For the purpose of this section "multilevel marketing scheme"

54. Section 44 of the Insurance Act shall be omitted. Omission of

Explanation.—A person who solicits and negotiates a contract of insurance

Amendment 66. In section 53 of the Insurance Act,—

‘Explanation.—For the purpose of sections 53 to 61A, "Tribunal" means

(b) in sub-section (2), in clause (b), sub-clause (i), shall be omitted.

Councils of "64C. On and from the date of commencement of this Act,— 25

Omission of 74. Section 64-I of the Insurance Act shall be omitted.

Amendment 78. In section 64R of the Insurance Act, in sub-section (1),—

Provided further that it shall be sufficient compliance of the provisions of the

Omission of 86. PART IV of the Insurance Act shall be omitted.

"110. (1) Any person aggrieved— Appeal to

Omission of 95. Section 110E of the Insurance Act shall be omitted.

(i) clause (aa) shall be omitted;

"(a) manner of making application for registration and documents to be

(daa) determination of preliminary expenses that may be excluded for

(iv) clause (e) shall be omitted;

AMENDMENTS TO THE GENERAL INSURANCE BUSINESS (NATIONALISATON) ACT, 1972

(viii) specify fine on intermediaries and insurance companies for misconduct of

(xxvii) address matters relating to the functions, code of conduct, etc., of

(b) in which the aggregate holdings of equity shares by a foreign company,

(a) any individual or unincorporated body of individuals or body corporate

(d) by a firm in which such person is a partner, or

(13) Every insurer in existence at the commencement of the Insurance (Amendment)

(4) A transfer or assignment of a policy made in accordance with section 38 shall

procured before such commencement, to a maxmum of an over-riding commission of

Explanation.— For the purposes of this sub-section, service of an insurance agent

52BB. (1) * * * * * Powers of

ACQUISITION OF THE UNDERTAKINGS OF INSURERS IN CERTAIN CASES

(ii) any order made under section 34E; or